2004 (5) TMI 506 - AT - Central Excise

Summary

Issues:
Dispute over utilizing credit of Basic Excise Duty (BED) towards payment of Additional Excise Duty (AED) under Textiles & Textile Articles Act, 1978.

Analysis:
The appeal was against the order-in-appeal passed by the Commissioner (Appeals) regarding the utilization of credit amounting to Rs. 1,50,000/- of Basic Excise Duty towards payment of Additional Excise Duty. The Assistant Collector allowed the claim, but the Commissioner (Appeals) reversed the decision, leading to the appeal. The dispute revolved around the interpretation of Notification No. 5/94 C.E. (N.T.), specifically Paragraph 2, which provided guidelines for utilizing specified duty credits for excise duty payments. The appellants argued that the restriction in the provisos of Paragraph 2 only applied to specific duties, allowing flexibility in utilizing Basic Excise Duty for other duties. The Tribunal analyzed the text of Paragraph 2 and concluded that Basic Excise Duty credits should be used for duties under the Central Excise Act, excluding Additional Excise Duties like AED (TTA) and AED (GSI).

The appellants relied on a circular by the Board related to a predecessor notification, highlighting the flexibility in utilizing specified duties for payment. They referenced judgments such as M/s. M.R.F. Ltd. v. C.C.E., Chennai and CC & CE, Vadodara v. Modern Petrofils Ltd., which supported the flexibility of utilizing Basic Duty credits for Additional Excise Duty payments. The Commissioner (Appeals) based their decision on a previous judgment that denied such flexibility, but the appellants distinguished this judgment using a later case and a Board's circular permitting flexibility in credit utilization.

The Tribunal considered the liberal approach conveyed through various circulars and held that denying flexibility in credit utilization would discriminate against the appellants compared to other assessees. Therefore, despite specific restrictions, the Tribunal allowed the appeal, emphasizing the importance of fairness and non-discrimination in applying excise duty credit utilization rules. As a result, the impugned order was set aside, and the appeal was allowed.