2011 (3) TMI 1218 - AT - Central Excise

Dismissal of Appeal on CENVAT Credit for Molasses in Sugar Manufacturing Upheld

The appeal against the order confirming duty demand on CENVAT credit utilization for molasses in sugar manufacturing was dismissed by the Appellate ... Demand of duty cleared by utilising the CENVAT credit availed by them on molasses - Held that:- Undisputedly, the period involved is from September, 2001 to December, 2001. The CENVAT Credit Rules, 2001 which came into force from 21/06/2001 under Rule 3(3) clearly provided that the CENVAT credit may be utilized for payment of any duty of excise on any final products or for payment of duty on inputs or capital goods themselves if such inputs are removed as such or after being partially processed, or such capital goods are removed as such provided that while paying duty, the CENVAT credit shall be utilised only to the extent such credit is available on the fifteenth day of a month for payment of duty relating to the first fortnight of the month, and the last day of a month for payment of duty relating to the second fortnight of the month or in case of a manufacturer availing exemption by notification based on value of clearances in a financial year, for payment of duty relating to the entire month. Revenue Appeal dismissed. Issues:Appeal against order confirming duty demand based on CENVAT credit utilization on molasses not forming part of inputs in sugar manufacturing process.Analysis:The appeal before the Appellate Tribunal CESTAT, Mumbai stemmed from an order passed by the Commissioner (Appeals) Aurangabad, confirming the duty demand against the respondent. The impugned order was based on the utilization of CENVAT credit on molasses that were alleged to not form part of the inputs in the process of manufacturing sugar. The proceedings were initiated by the department through a show cause notice demanding duty amounting to Rs. 77,59,089, which the Dy. Commissioner, Ahmednagar had initially dropped. The period in question was from September 2001 to December 2001.The CENVAT Credit Rules, 2001, in force from June 21, 2001, under Rule 3(3), clearly outlined the permissible utilization of CENVAT credit. The rule specified that the credit could be used for payment of excise duty on final products, inputs, or capital goods themselves, subject to certain conditions. Notably, the credit could only be utilized to the extent available on specific dates for payment of duty relating to particular periods. In this case, the appellant failed to demonstrate any grounds warranting interference in the impugned order based on the provisions of the law.In light of the legal provisions and the lack of a compelling case for intervention, the Appellate Tribunal concluded that there was no basis for overturning the impugned order. Consequently, the appeal was deemed unsuccessful and dismissed by the Tribunal. The judgment, delivered by Justice R.M.S. Khandeparkar, President, affirmed the decision based on the applicable law and factual circumstances presented in the case.