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Commissioner of Central Excise, Mumbai Versus Uni Deritend Ltd. And Vice-Versa

2018 (1) TMI 484 - CESTAT MUMBAI

CENVAT credit - case of respondent is that the credit was available to them prior to amendment in Rule 7(d) of the CCR, 2004 and therefore they cannot be asked to follow the said Rule 7(d) - Section 38A of the Central Excise Act - Held that: - the said rule permits distribution of cenvat credit. Any duty paid by the assessee does not automatically become cenvat credit. Any duty paid by the assessee which qualifies the test of Rule 3 of the CCR, 2004 can become cenvat credit when the same is avai .....

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credit only in terms of Rule 7(d) read with Explanation 3 - demand of reversal of credit upheld. - Penalty - Held that: - since the demand of duty under Section 11A(4) of the Central Excise Act, 1944 is upheld, the assessee is liable to mandatory penal provisions of Section 11AC of the Central Excise Act, 1944 - penalty upheld. - Appeal allowed - decided in favor of Revenue. - Appeal No. E/86540/16-Mum, Appeal No. E/86210/16-Mum - Dated:- 29-12-2017 - Mr. Raju, Member ( Technical ) Shri .....

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to all units, was availed only at Thane unit. A show cause notice was raised alleging that the entire credit could not have been availed at one unit but should have been distributed to all the units. The original adjudicating authority confirmed the demand for the period 1.7.2012 to 31.3.2013 in view of the amendment to Rule 7(d) of the Cenvat Credit Rules read with Explanation 3. The said demand was upheld by the Commissioner (Appeals). However, the penalty imposed by the original adjudicating .....

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as it existed prior to the said amendment. 3.1 He further argued that it was the revenue neutral situation and there could not have been any intention to evade duty. He argued that the entire credit was available to three units of the appellant and thus by availing credit in just one unit, the appellant could not have gained anything. 3.2 He took me through the invoices on which the said credit has been availed. The invoices produced by him showed that the same has been raised in the year 2011 a .....

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cher Motors Ltd. vs.UOI 1999 (106) ELT 3 (SC) to assert that the benefit available to them at the time of accrual of credit cannot be denied if the law is subsequently changed. He particularly relied on Section 38A of the Central Excise Act, 1944 which reads as follows:- 38A. Effect of amendments, etc., of rules, notifications or orders. Where any rule, notification or order made or issued under this Act or any notification or order issued under such rule, is amended, repealed, superseded or res .....

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mpugned order. He further pointed out that the law at the material time was very clear and there was no scope for interpretation. In these circumstances, Uni Deritend Ltd. should have followed the law and not given their own interpretation to the same. 5. I have gone through the rival submissions. I find that the primary argument of Uni Deritend Ltd. is that the credit was available to them prior to amendment in Rule 7(d) of the Cenvat Credit Rules, 2004 and therefore they cannot be asked to fol .....

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ng units or units providing output service, subject to the following conditions, namely:- (a) (b) (c) (d) credit of service tax attributable to service used by more than one unit shall be distributed pro rata on the basis of the turnover of such units during the relevant period to the total turnover of all its units, which are operational in the current year, during the said relevant period. Explanation 3: For the purposes of this rule, relevant period shall be,- (a) If the assessee has turnover .....

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by the assessee does not automatically become cenvat credit. Any duty paid by the assessee which qualifies the test of Rule 3 of the Cenvat Credit Rules, 2004 can become cenvat credit when the same is availed by the assessee as cenvat credit. The claim of Uni Deritend Ltd. that as soon as they paid the duty, the same became credit in their account is misplaced. To convert any duty paid into cenvat credit, it has to be claimed in their account as cenvat credit. In the instant case, while the invo .....

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