TMI Blog2013 (9) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act and Rules made thereunder and no suo motu credit of the duty paid in excess may be taken by the assessee - it would have continued to have the impugned credit in its account – the commissioner correctly held that the respondent had taken the impugned credit under valid duty paying documents under cover of which inputs had been received – Order set aside – Decided in favour of Assessee. The credit had been legitimately earned by the assessee on procurement of inputs on payment of duty and used for payment of duty following the amendment of Cenvat Credit Rules under Budget 2003 - Vide Circular No. 7/16/2003-C.X. the CBEC had also clarified that it was considered appropriate not to put any cap on the use of the AED (GSI) credit accruing prior to 1-3-2003 - In terms of the provisions enacted in Finance Act, 2004, the debits were held not amounting to payment of duty and the assessee was required to meet the same obligation by payment from PLA. The proper procedure to take re-credit of Cenvat credit wrongly used was to file refund claim under Section 11B of the Central Excise Act. Vide the impugned order, the Commissioner held that the appellants were entitled to restoration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003. Further, as per a circular issued by the CBEC on 06/03/2003, the credit of AED(GSI) accrued prior to 01/03/2003 could be utilized for payment of BED on the final product. Accordingly, the appellant utilized the aforesaid credit of Rs.9,97,11,819/- for payment of BED on tyres for the period from February to July 2003. However, in terms of a subsequent circular issued by the CBEC, the Department issued a show-cause notice to the appellant for recovery of the above credit of Rs.9,97,11,819/- on the ground that the aforesaid amendment to the CCR, 2002 was effective from 01/03/2003 only and, therefore, the credit of AED(GSI) accrued prior to that date was not available for utilization for payment of BED on tyres. Later, the relevant rule was further amended by the Finance (No.2) Act, 2004 to provide that AED(GSI) paid on NTCF on or after 01/04/2000 only was available as credit for utilization in payment of BED on final product. By virtue of this retrospective amendment of Rule 3(6) of the CCR, 2002, utilization of credit of AED(GSI) paid prior to 01/04/2000 for payment of BED on the final product was not permissible. The amount of such AED(GSI) credit utilized by the appellant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to be imposed on the appellant under Rule 13/15 of the CCR, 2002/2004 and Rule 25 of the Central Excise Rules(CER), 2002 read with Section 11AC of the Central Excise Act. 5. In their reply to the show-cause notice, the appellant sought to justify their actions on certain legal grounds. They also invoked the principle of restitution to justify the restoration of CENVAT credit of AED(GSI) after the repayment of duty pursuant to the retrospective amendment of Rule 3(6) by the Finance (No.2) Act, 2004. Further, they relied on Order-in-Original No.18/2006-07 dt. 28/02/2007 passed by the Commissioner of Central Excise, Mumbai-III in the case of M/s. CEAT Ltd. and also on the Tribunal s decision in Goodyear (India) Ltd. vs. CCE, Faridabad [2006(199) ELT 842 (Tri. Delhi)]. The adjudicating authority, however, on its own interpretation of Rule 3(6) of the CCR, 2002 as amended from the time to time as also of the relevant provisions of the amending statutes viz. the Finance (No.2) Act, 2004 and the Finance Act, 2005, held all the issues against the assessee. As regards the Order-in-Original dt. 28/02/2007 of the CCE, Mumbai-III in the case of M/s. CEAT Ltd., the adjudicating authority n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an amount of Rs.9,39,19,737/- in their AED(GSI) credit account in March, 2008 and utilized this amount for payment of AED(GSI) on DNTCF removed for captive consumption during 1995-98. This payment of duty in March 2008 was made against a pending demand. 7. In a show-cause notice dt. 30/01/2009, the Department demanded the aforesaid amount of Rs.9,39,19,737/- from the assessee as AED(GSI) on DNTCF under Section 11AC of the Central Excise Act on the ground of irregular utilization of CENVAT credit of AED(GSI) taken on NTCF. This show-cause notice also demanded interest on duty under Section 11AB of the Act apart from proposing penalties under Section 11AC of the Act and Rule 15 of the CCR, 2004 read with Rule 25 of the CER, 2002. The demands were contested by the assessee who relied on the Tribunal s decision in Goodyear (India) Ltd. (supra). After considering their submissions, the Commissioner confirmed the demand of duty (with interest) against the assessee and imposed on them a penalty equal to duty under Section 11AC of the Act and separate penalty of Rs.50,000/- under Rule 15 of the CCR, 2004. Hence the assessee s appeal. 8. On the facts stated hereinabove, the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yres and flaps did not attract AED (GSI) and since the relevant modvat/cenvat provisions prohibited utilization of AED (GSI) for discharge of BED payable on tyres and flaps, credit of such AED paid on inputs could not be utilized and accumulated in its account. As per Rule 3(6)(b) of CCR, Cenvat credit in respect of, inter alia, Additional Duty of Excise leviable under Sec. 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, shall be utilized only towards payment of duty of excise leviable under the said AED (GSI) Act. By issue of Notification No. 13/2003-C.E. (N.T.), dated 1-3-03, this prohibition was relaxed and the assessee was allowed use of AED (GSI) to discharge BED payable on tyres. The assessee had accumulated credit of Rs. 32,78,21,329/- which it utilized for payment of BED. Vide Sec. 88 of the Finance Act, 2004, Government restricted use of AED (GSI) for payment of BED and barred use of such AED (GSI) earned prior to 1-4-2000. Vide Sec. 124 of Finance Act, 2004, Government issued detailed directions for payment of BED discharged by the assessee along with interest @13% in 36 equal installments. The assessee accordingly paid an amount of Rs. 65,54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be held to have affected the balance of AED (GSI) in the accounts of the assessee. Therefore, once the appellant discharged the duty liability on tyres by debiting PLA, the appellants account stood credited with the debits initially made. A refund claim is warranted when duty is excess paid. In the instant case, the payment from AED (GSI) was not recognized as payment of duty. Therefore, there was no question of the assessee claiming refund of the same. The transaction utilizing AED (GSI) should be held to have been cancelled. We find that that the Commissioner properly allowed the appellant to retain the AED (GSI) credit and maintain status-quo ante once the debits made towards BED during July, 2005 to June, 2006 was held to be not payment of duty. 7. We have considered the case laws cited by the ld. counsel for the respondents. We discuss them below seriatim. (i) In the Friends Wire Industries case the appellant had utilized Modvat credit for payment of duty on a final product which was not declared under Rule 57G of the Central Excise Rules. While upholding demand of duty due on the final product cleared by debiting Modvat credit, the Tribunal held that duty was to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount paid by mistake. The Tribunal held that the amount involved was not duty and limitation did not apply for its refund. (b) Comfit Sanitary Napkins (I) Pvt. Ltd. - 2004 (174) E.L.T. 220. In this case it was held that the assessee cannot suo motu take credit without applying for refund, when excess duty was paid. The conflict of views entailed the following reference to a Larger Bench of the Tribunal:- If an assessee avails suo motu credit of the amount of duty paid in excess by him, whether the view taken by the Tribunal in the case of Comfit Sanitary Napkins (I) Pvt. Ltd. - 2004 (174) E.L.T. 220 will apply or the views taken by the Tribunal in the case of Motorola India Pvt. Ltd. - 2006 (193) E.L.T. 468 (Tri.) = 2007 (7) S.T.R. 613 (Tri.) = 2005 (71) RLT 334 will apply. The Tribunal answered the reference holding that all types of refund have to be filed under the Central Excise Act and Rules made thereunder and no suo motu credit of the duty paid in excess may be taken by the assessee. We find that the ratio of the BDH Industries Ltd. case relates to excess duty paid and the procedure to be followed for getting back such excess duty paid. Ratio of that case does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the submissions, we find that the issues are covered by the Tribunal s decision rendered in the case of Goodyear (India) Ltd. It is not in dispute that the AED(GSI) was paid on DNTCF in March 2008 and the same was utilized for payment of BED on tyres in May 2008. It is not in dispute that utilization of CENVAT credit of AED(GSI) paid on the input on or after 01/04/2000, for payment of BED on the final product was not affected by any of the amendments to Rule 3(6) of the CCR, 2004. In the present context, DNTCF processed from NTCF in the appellant s factory is input vis--vis the final product, in the manufacture of which it was captively used. AED(GSI) was paid on this input by the appellant in March 2008. CENVAT credit of this duty was, therefore, available to the appellant for utilization in payment of BED on the final product. No judicial authority has been cited before us on behalf of the Department to read the expression AED(GSI) paid on or after 01/04/2000 as AED(GSI) payable on or after 01/04/2000. In the instant case, what the assessee did was utilization of the AED(GSI) paid on DNTCF long after 01/04/2000, in payment of BED on their final product. The decision r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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