2004 (12) TMI 462 - AT - Central Excise

Summary

Issues: Interpretation of CENVAT Scheme and Notification No. 8/2000-C.E.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the main issue involved the interpretation of the CENVAT Scheme and the benefit of Notification No. 8/2000-C.E. The appellant, a manufacturer of P & P medicaments, had accumulated CENVAT credit of Rs. 60,217.00, which was utilized towards payment of duty on goods cleared for home consumption. The lower authorities denied this utilization on the grounds that the accumulated CENVAT credit could not be used to debit duty on goods manufactured for loan license holders without declaring the intention to avail the benefit of exemption simultaneously with the benefit of CENVAT.

The Tribunal referred to C.B.E.C. instructions Circular No. 323/39/97-CX., dated 14-7-97, which approved the simultaneous availment of exemption under Notification No. 16/97-C.E. and Modvat credit on inputs used for export production. These instructions allowed the credit to be used for payment of duty when the SSI unit crossed the exemption limit of Rs. 100 lakhs or refunded as per Modvat rules. The Tribunal found no reason to restrict debit entries against the accumulated credit unless and until the Rs. 100 lakh clearance limit was reached, as in this case. The Tribunal concluded that there was no justification to uphold the orders of demand and consequent penalty by the lower authorities, setting them aside and allowing the appeal.

The judgment highlights the importance of interpreting the provisions of the CENVAT Scheme and relevant notifications in a manner that aligns with the overarching principles and objectives of the scheme. It emphasizes the need for a consistent and fair application of rules and instructions issued by the competent authorities to ensure that taxpayers are not unduly burdened or penalized for legitimate utilization of credits within the framework of the law.