2014 (3) TMI 45 - AT - Central Excise

Restrictions on Excise Credit Use Upheld; Penalty Overturned

The Tribunal held that accumulated Additional Duties of Excise (Textiles and Textile Articles) credit cannot be utilized for paying Additional Duties of ... Utilization of accumulated credit of AED (T&TA) - whether accumulated credit of AED (T&TA) can be cross utilized for payment of duty relating to AED(GSI) and for payment of basic excise duty during January 2003 to May 2003. - Held that:- appellants could have utilised Cenvat credit of AED (T &TA) only towards payment of the same kind of duty of excise i.e., AED (T &TA) in terms of Rule 3(6)(b) of the Cenvat Credit Rules, 2001. - appellant's appeal in respect of cross-utilization of credit of AED(T&TA) for payment of AED(GSI) is rejected. The appellant is directed to pay the said amount in cash to Revenue. The appellant can take credit of the said amount of AED(T&TA) and can use it, if possible, for purpose allowed under the law. The appellant will pay the total amount including payment in cash along with interest and penalty. The appellant will be free to take credit and utilize, if possible, and in accordance with law. - Decided against the appellant. Issues Involved:1. Cross-utilization of AED (T&TA) credit for payment of AED (GSI).2. Cross-utilization of AED (T&TA) credit for payment of Basic Excise Duty (BED).3. Penalty imposed on an individual appellant.Issue-Wise Detailed Analysis:1. Cross-utilization of AED (T&TA) credit for payment of AED (GSI):The primary issue is whether the appellant can use accumulated credit of Additional Duties of Excise (Textiles and Textile Articles) [AED (T&TA)] for paying Additional Duties of Excise (Goods of Special Importance) [AED (GSI)]. The Tribunal previously allowed such utilization based on its judgments in Reliance Industries Ltd. vs. CCE and Grasim Industries Ltd. vs. CCE. However, the Revenue opposed this, arguing that AED (T&TA) and AED (GSI) serve different purposes and are governed by different statutes. The Tribunal noted that the legislative intent and historical context of the Modvat/Cenvat Credit Rules consistently disallowed such cross-utilization. The Tribunal concluded that the credit of AED (T&TA) was always meant to be used exclusively for AED (T&TA) and not for AED (GSI), emphasizing that any rule permitting cross-utilization would conflict with the primary Acts governing these duties. Consequently, the appeals regarding the cross-utilization of AED (T&TA) for AED (GSI) were rejected.2. Cross-utilization of AED (T&TA) credit for payment of Basic Excise Duty (BED):The Tribunal examined whether AED (T&TA) credit could be used to pay Basic Excise Duty (BED). The Tribunal found no legal basis for such cross-utilization. It noted that the relevant rules and notifications, including Notification No. 21/1999-CE(NT) and Rule 57AB(2)(b) of the Central Excise Rules, consistently prohibited using AED (T&TA) credit for paying BED. The Tribunal also referenced subsequent judgments that upheld this prohibition. The Tribunal dismissed the appeal related to cross-utilization for BED, emphasizing that such utilization was not permissible under any interpretation of the rules.3. Penalty imposed on an individual appellant:The appeal also involved a penalty imposed on an individual appellant, Shri R.K.Shriyan. The Tribunal set aside the penalty, aligning with its earlier decisions in related appeals. The Tribunal found no basis to uphold the penalty in light of the overall findings on the primary issues.Conclusion:The Tribunal concluded that the accumulated credit of AED (T&TA) could not be used for paying AED (GSI) or BED. The appeals challenging the cross-utilization of AED (T&TA) credit were dismissed. The penalty imposed on the individual appellant was set aside. The Tribunal directed the appellant to pay the disputed amounts in cash, with the option to utilize the credit in accordance with the law. All appeals were disposed of accordingly.