TMI Blog2013 (4) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it will amount to conferring of double benefit. The moment sub-rule (5C) was introduced, the Legislature made its intention clear that from the date of coming into force of the said amended rule, in case of future remission on the ground mentioned in the said sub- rule, there will be reversal of the credit. As the amendment has been effected from a particular date and at the same time, prior to such amendment, there was no provision of reversal as introduced in the Rules by way of amendment under the circumstances stated therein. Thus, it is creation of a new right in favour of the Revenue and in such circumstance, in the absence of any contrary intention reflected from any of the provisions of the Statute, the amendment must be held to be prospective. Such being the position, sub-rule (5C) of the Rules is effective from September 7, 2007 and for input credited earlier, there is no scope of reversal of the credit if the finished product becomes unfit for human consumption unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed. - Tax Appeal No. 2520 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y similar circumstances, the issued reached the High Court at the instance of the Revenue. The Division Bench rejected the appeal by taking note of the fact that Tribunal had accepted as a finding of the fact that Adjudicating Authority had not disputed the fact that the finished goods as well as semi- finished goods were fully destroyed in the fire in spite of the respondent having taken all precautions. The tribunal placed reliance upon the decision of the Larger Bench of the Tribunal in the case of Grasim Industries Versus CCE Indore, reported in 2007 (208) ELT 336 (Tri.-LB), wherein it was held that the credit availed on inputs destroyed in fire was not required to be reversed and accordingly, set aside the demand on that count. By taking note of the aforesaid fact, the Division Bench held the Tribunal had merely followed an earlier decision of the Larger Bench of the Tribunal and based its conclusions upon findings of fact recorded by it upon appreciation of the evidence on record, and therefore, the decision did not call for intervention. 5. After taking note of the aforesaid two decisions, the referring Division Bench observed that Cenvat Credit was made available to a man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Biopac India (supra), the entire situation required a further consideration and being a coordinate Bench, it would not be open for the referring Division Bench to take a difference view and therefore, Their Lordships decided to refer the matter to a larger Bench. 8. In order to appreciate the question referred to this Bench, it will be appropriate to refer to the relevant portion of the provisions contained in Rule 3 of the Cenvat Credit Rules and Rule 21 of the Central Excise Rules, where are quoted below:- 9. Rule 3 of the Cenvat Credit Rules, relevant for the purpose of disposing of the Reference is quoted below:- CENVAT CREDIT.- (1) A manufacture or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT Credit ) of- (i) The duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act; (ii) The duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act; (iii) The additional duty of excise specified leviable under section 3 of the Additional duties of Excise (Textile and Textile Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture of intermediate products, by a job worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Government of India vide number G.S.R. 547 (E), dated the 25th March, 1986 and received by the manufacturer for use in or in relation to, the manufacturer of final product, on or after the 10th day of September, 2004. Explanation:- For the removal of doubts it is clarified that the manufacture of the final products and the provider of output service shall be allowed CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act on goods falling under heading 9801 of the First Schedule to the Customs Tariff Act . 10. Rule 21 of the Central Excise Rules:- 21. Remission of duty.- Where it is shown to the satisfaction of the Commissioner that goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal, he may remit the duty payable on such goods subject to such conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication not only from the date of introduction of the new sub-rule (5C) but the same principle applies alos in respect of credit already taken prior to September 7, 2007. The learned counsel for the Revenue, therefore, submit that the provision contained in sub-rule (5C) of Rule 3 of Cenvat Credit Rules are retrospective in operation and the Cenvat Credit already taken is reversible once remission has been given on the final product. 13. Mr. Dave, the learned counsel appearing on behalf of the respondent has on the other hand, laboriously contended before us that Cenvat Credit is crystallized the moment the raw material or the input was used in manufacturing of final product and it has no connection with the question of exemption from duty subsequently given for destruction of the final product. By referring to the provision of remission of duty on final product for such event. Mr. Dave contends that in the concerned rule there is specific provision for grant of remission on imposing conditions, but once such remission has been granted unconditionally, there is no scope of reversing the credit of input already taken. In other words, accordingly to Mr. Dave, while granting remissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried nil rate of duty. Such being the provision, as it stood in the Cenvat Credit Rules prior to September 7, 2007, there is no scope of application of equitable doctrine against the assesse and in favour of the Revenue on the ground that it will amount to conferring of double benefit. The moment sub-rule (5C) was introduced, the Legislature made its intention clear that from the date of coming into force of the said amended rule, in case of future remission on the ground mentioned in the said sub- rule, there will be reversal of the credit. 17. In this connection we may profitably refer to the following observation of the Supreme Court in the case of Delta Engineers V . State of Goa reported in (2009) 12 SCC 110 laying down the principles to be followed in determining whether a statutory amendment is retrospective or clarificatory in nature: We may next consider whether the 1992 and 1994 Amendments to the Rules were retrospective in operation. In Zile Singh versus state of Haryana this Court held: 13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X
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