TMI Blog2014 (6) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... e restriction on utilization of Cenvat credit of duties/taxes as mentioned in Rule 3(7) (b) would be applicable, there would be one more additional restriction on utilization of credit of duties/taxes other than those mentioned in Rule 3(7) (b), i.e. credit of BED, AED (GSI) etc. and this restriction is that this credit cannot be used for payment of duties not exempted under this notification, as, as discussed above, if this is permitted, this would result in refund of duties like education cess, S & H cess, NCCD etc. which is not permitted under this notification, while it is well settled law that what is not permissible directly cannot be allowed indirectly. Therefore, in order to ensure that an assessee availing of exemption under this notification does not end up availing this exemption in respect of education cess and S & H cess also, he cannot be allowed to use BED credit for payment of education cess and S & H cess, though this may be permitted under the provision of Rule 3(4) of the Cenvat Credit Rules, 2004. The provision of Rule 3(4) of the Cenvat Credit Rules are after all a facility and the extent to which the same are in conflict with the condition of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty under Section 3(1) of the Act. (ii) Addi tional excise duty leviable under Additional Duties of Excise (Goods of Special Importance Act), 1957 [hereinafter referred to as AED (GSI)]. (iii) Additional excise duty leviable under Additional Duties of Excise (Textile Textile Articles) Act, 1978 [h ereinafter referred to as AED (T TA)]. In terms of Explanation to this notification below para 2A, for the purpose of this notification, duty paid, by utilization of the amount credited in the account current, shall be taken as payment of duty by the wa y other than utilization of Cenvat credit under the Cenvat Credit Rules, 2004. 1.3. Clause 1A of the exemption notification reads as under : - In cases where all the goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall be available subject to the condition that, the manufacturer first utilizes whole of the Cenvat credit available to him on the last day of the month under consideration for the payment of duty on goods cleared during such month and pays only the balance amount in cash . 1.4. It is the duty paid in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on appeals being filed against the orders of Assistant Commissioner, the CCE (Appeals) by a common order in - appeal dated 19/05/09, set aside the orders of Assistant Commissioner and allowed the appeals on the grounds that (a). In terms of the provisions of Rule 3 (4) of the Cenvat credit Rules, 2004 the Cenvat credit of various duties can be utilized for payment of any duty of excise; (b). The only restriction on utilization of Cenvat credit of various duties is specified in Rule 3 (7) (b) according to which the credit of AED (GSI), AED (T TA), NCCD, education cess and S H cess be utilized only for payment of AED (GSI), AED (T TA), NCCD, education cess and S H cess respectively, and there is no restriction on utilizing BED credit for payment of education cess of S H cess. 1.9 Again st the above order of CCE (Appeals), these appeals have been filed by the Revenue, alongwith stay applications. 2. Heard both the sides. 3. Shri R.K. Verma, the learned Senior Departmental Representative assailed the impugned order by reit erating the grounds of appeal in the Revenue‟s appeals and pleaded that- (a). In terms of para (1A) of the notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credi t respectively; that Hon‟ble Gauhati High Court in case of CCE, Dibrugarh vs M/s Prog Bosimi Synthetics Ltd. in its judgment dated 29.6.2011 has held that while NCCD is not exempt under Notification No. 32/99 - CE (a notification similar to Notifcation No.56/2002 - CE), a manufacturer availing of notification No. 32/99 - CE can pay NCCD through credit of basic excise duty; that Tribunal in case of CCE, Ludhiana vs Malwa Industries Ltd. reported in 2004 (171) ELT 67 (Tri Del) has held that BED or SED credit could be utilized for payment of AED (GSI); that the Tribunal in case of CCE, Vapi vs. Balaji Industries reported in 2008 (88) RLT 236 (CESTAT-Ahmd.) has held that in terms of Rule 3(4) of Cenvat Credit Rules 2004, education cess could be paid through BED cred it and restrictions in Rule 3(7) cannot be extended for utilization of BED credit for payment of education cess; that same view has been taken by the Tribunal in the cases of Prag Bosimi Synthetics Ltd. vs. CCE, Dibrugarh reported in 2007 (216) ELT 254 (Tri.- Kolkata) wherein it was held that BED credit could be utilized for payment of NCCD; that Tribunal in the case of Sun Pharmaceutical vs. CCE reported in 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than goods specified in the Annexure- I appended hereto, and cleared from a unit located in the Industrial Growth Centre, Industrial Infrastructure Development Centre of Export Promotion Industrial Infrastructure Development Centre or Export Promotion Industrial Park; or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area as the case may be, leviable thereon under any of the said Acts as is equivalent to the amount of duty paid by the manufacture of goods, other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2002; 1A. In cases where all the goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall be available subject to the condition that, the manufacturer first utilizes whole of the CENVAT credit available on the last day of the month under consideration for payment of duty of goods cleared during such month and pays only the balance amount in cash. 2. The exemption contained in this notification shall be given effect to in the following manner, namely:- (a) The m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid less the amount of the CENVAT Credit availed of, in respect of the duty paid on the inputs used in or in relation to the manufacture of goods cleared under this notification.; Explanation For the purposes of this notification, duty paid, by utilization of the amount credited in the account current, shall be taken as payment of duty by way other than utilization of CENVAT credit under the CENVAT Credit Rules, 2002. 3. The exemption contained in this notification shall apply only to the following kind of units namely:- x x x x x x x x x x x x 5.2 Section 91 and 93 of the Finance Act, 2004 are as under - 91. Education Cess. (1) Without prejudice to the provisions of sub -section (11) of section 2, there shall be levied and collected, in accordance with the provisions of this Chapter as surcharge for purpose of the Union, a cess to be called the Education Cess, to fulfill the commitment of the Government to provide and finance universalized quality basic education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilize, such sums of money of the Education Cess levied under sub -section (11) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice: Provided that while paying duty of exercise or service tax, as the case may be, the CENVAT credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be: x x x x x x x x x x x x x x x x x x x x x x x x x x x Rule 3(7)(b) -CENVAT credit in respect of- (i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978); (ii) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001); (iii) the education cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004); [(iii a) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007)]; (iv) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under items (i), (ii), and (iii) above; (v) the additional duty of excise leviable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared that the credit of the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) paid on or after the 1 st day of April, 2000 may be utilized towards payment of duty of excise leviable under the First Schedule or the Second Schedule to the Excise Tariff Act. 6. From a plain reading of the Notification No. 56/2002 -CE, it will be seen that- 1. this notification has been issued under section 5A of Central Excise Act, 1944 read with Section 3(3) of AED (GSI) Act, 1957 and Section 3(3) of AED (T TA) Act,1978 and it exempts to the extent as mentioned in it, the duty of excise or Additional duty of Excise, as the case may be, leviable under any of these Act on the goods covered by this notification and manufactured and cleared by the units located in areas as specified I Annexure-II to the notification and thus the duties exempted under this notification are- (a) Basic Excise duty leviable under section 3(1) of Central Excise Act, 1944 on the goods mentioned in the 1 st scheduled to the Central Excise Tariff Act, 1985; (b) Special Excise duty leviable under section 3(1) of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To illustrate, if all the goods manufactured by a manufacturer availing of Notification No. 56/2002 - CE attract BED; education cess and S H cess, and while Cenvat credit of BED available at the end of the month is C‟ and his BE D liability for the goods cleared during the month is B‟ (more that C‟) and he after fully utilizing the Cenvat credit to the extent possible, pays the balance amount of duty (B -C) through PLA, the quantum of refund available to him would be B -C. but if before fully utilizing the Cenvat credit (BED credit) for payment of BED, he utilizes credit amount D‟ for payment of education cess, the credit available for payment of BED would be C-D and the duty payment through PLA and the quantum of refund would then be B (C-D) i.e. (B-C) + D. Thus he will end up getting exemption in respect of education cess also. This would be permissible only if Notification No. 56/2002 - CE also exempts education cess and S H cess. 6.2 But the education cess leviable under section 91 of the Finance Act 2004 and S H cess leviable under section 136 of Finance Act, 2007 are not covered by Notification No. 56/2002- CE as is clear from the languag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f BED and if this credit is utilized/diverted for payment of education cess and S H cess, the payment of BED through PLA and, hence, the quantum of refund, during next month will get distorted i.e. will increase to that extent. 6.5 Therefore, in our view, a manufacturer availing of notification 56/02 - CE cannot utilize BED credit for payment of education cess and S H cess as, as demonstrated above, it will amount to the indirect refund of education cess and S H cess, which is not permissible. The payment of education cess and S H cess through BED credit is in conflict with the scheme of this exemption which does not exempt the education cess and S H cess and which is available only in respect of the duties mentioned in it subject to following of condition of para 1A of the notification. 7. The respondents citing the judgment dated 29.06.2011 of Hon ble Guwahati High Court in case of CCE, Dibrugarh vs. Prag Bosimi Synthetics Ltd. (Central Excise Reference application No.4/2008) and various judgement of Tribunal plead that in terms of the provisions Rule 3(4) read with Rule 3(7) (b) of the Cenvat credit Rules 2004, there is no prohibition on use of the BED credit for pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as discussed above, if this is permitted, this would result in refund of duties like education cess, S H cess, NCCD etc. which is not permitted under this notification, while it is well settled law that what is not permissible directly cannot be allowed indirectly. Therefore, in order to ensure that an assessee availing of exemption under this notification does not end up availing this exemption in respect of education cess and S H cess also, he cannot be allowed to use BED credit for payment of education cess and S H cess, though this may be permitted under the provision of Rule 3(4) of the Cenvat Credit Rules, 2004. The provision of Rule 3(4) of the Cenvat Credit Rules are after all a facility and the extent to which the same are in conflict with the condition of Notification No.56/2002-CE, the same would not be applicable, as it is the condition of notification which would prevail. In our view, therefore, the question as to whether education cess and S H cess can be paid by a manufacturer availing exemption under notification No.56/2002- CE by utilizing BED credit, has to be answered in the context of the conditions and the scheme of the notification and not by looking ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
