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2006 (2) TMI 576 - AT - Central ExciseDemand - Cenvat/Modvat - Inputs - Reversal of outstanding credit - HELD THAT:- It is to be noted that it remains ruled by the Apex Court that Modvat credit is indefeasible. The effect of the ruling is that credit once correctly taken and utilised is incapable of being set aside, made void. In the present case, the revenue is demanding back credit which was correctly taken and utilised relying on rule 9(2). This is not permissible in view of the ruling of the Supreme Court in Dai Ichi Karkaria [1999 (8) TMI 920 - SUPREME COURT]. Coming to the submission of the learned DR that assessee opting for exemption must fulfil the terms of the exemption, it is to be noted that exemption is in terms of notification issued from year to year and not in terms of Rule 9(2) of Cenvat Credit Rules. There is no reference or incorporation of the condition of Rule 9(2) in those notifications. That apart, Rule 9(2) cannot be interpreted in a manner as to undermine the indefeasibility of Modvat credit. A reading of the said rule would make it clear that what is required in terms of the rule is to determine the Cenvat credit taken on the inputs in stock and debit it from the credit balance, "if any”, lying in assessee’s credit, and further credit balance, "if any”, lapsing and not recall of Modvat credit already utilised correctly. If the Rule contemplated additional cash payment on account of balance in Cenvat credit being insufficient, the Rule would not have qualified the credit balance as balance ”if any”. The addition of those words make it clear that Cenvat credit balance alone is contemplated and no additional payment. An interpretation that requires additional payment if the balance in the credit account is not sufficient to meet debit of Cenvat credit on inputs in stock etc. would be to permit recall of Modvat credit correctly utilised. Such an interpretation goes against the scheme of Cenvat credit and the language of Rule 9(2). Thus, there is no merit in the appeal of the revenue. It fails and is rejected.
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