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M/s. Dee Sons Silk Mills (P) Ltd. Versus C.C.E., Chandigarh

2016 (3) TMI 161 - CESTAT NEW DELHI

Cenvat credit on AED (T&TA) for payment of basic excise duty on clearance of the final product from the factory - whether appellant had intentionally utilized the AED (T & TA) for payment of basic excise duty, knowing fully well that such utilization is prohibited under Rule 3 (6) (b) of the Cenvat Credit Rules, 2002? - initiation of proceedings for recovery of wrongly availed cenvat demand alongwith interest and imposition of equal amount of penalty by invoking the extended period of limitation .....

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such wrongly availed credit. It is not in dispute that the appellant has not complied with the statutory provisions in not filing the returns in time and that the credit particulars were not reflected therein. Since, the information regarding taking of cenvat credit on the disputed duty amount and utilization thereof for clearance of the finished products was within the knowledge of the Department, the show cause notice issued on 04.03.2008, proposing recovery of cenvat credit for the period Apr .....

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Member (Judicial) For the Appellant : Ms. Priyanka Goel, Advocate For the Respondent : Mr. R.K. Gupta, D.R. ORDER Per S. K. Mohanty Brief facts of the case are that the appellant is engaged in the manufacture of man-made fabrics falling under Chapter 55 of the First Schedule to the Central Excise Tariff Act 1985. The appellant availed Cenvat Credit facility in respect of duty paid on inputs used in or in relation to manufacture of final products. During the course of audit of the books of accoun .....

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sions of Rule 3 (6) (b) of the Cenvat Credit Rules, 2002. The reason assigned for such objection is that cenvat credit of AED (T & TA) taken on inputs can only be utilized towards payment of AED (T & TA) and not towards payment of BED leviable on the final product. Accordingly, show cause notice dated 04.03.2008 was issued to the appellant proposing for recovery of the cenvat credit taken on AED ( T & TA) utilized towards basic excise duty under Rule 12 of the Cenvat Credit Rule, 200 .....

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Ms. Priyanka Goyal, the ld Advocate appearing for the appellant submitted that the appellant was not aware of the legal position regarding restriction in using cenvat credit taken on AED (T&TA) for payment of basic excise duty on clearance of the final product from the factory. She further submitted that the appellant had maintained proper records for taking of cenvat credit on inputs and utilization towards payment of Central Excise Duty on the final product. Thus, according to the ld. Advo .....

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Zarda Udyog vs. CCE, New Delhi reported in 2005 (188) E.LT. 251 (S.C.) 2. Pushpam Pharmaceuticals Co. vs. CCE, Bombay reported in 1995 (78) E.L.T. 401 (S.C.) 3. CCE vs. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T. 276 (S.C.) 4. CCE & Cus., Aurangabad Vs. Swastic Auto Products reported in 2008 (222) E.L.T. 200 (Bom.) 5. K.G. Denim Ltd. vs. CCE, Salem reported in 2008 (222) E.L.T. 464 (Tri. Chennai) 6. Sterlite Telelink Ltd. vs. CCE, Vapi reported in 2014 (312) E.L.T. 353 (Tri. .....

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od of limitation is proper and justified. 4. I have heard the ld. Counsel for both sides and perused the records. 5. It is an admitted fact on record that the appellant had used AED (T&TA) for payment of basic excise duty leviable on removal of final product from the factory. Such utilization is not permissible in law in view of the embargo created in rule 3 (6) (b) of the Cenvat Credit Rules, 2002. Thus, I am of the considered opinion that there is no merit in the case of the appellant towa .....

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