2015 (3) TMI 659 - HC - Central Excise

Court affirms Excise Duty credit limits, penalties deleted for lack of intent. Revenue prevails, penalties favor appellant.

Raymond Limited Versus The Commissioner, Central Excise and Customs

Raymond Limited Versus The Commissioner, Central Excise and Customs - 2015 (322) E.L.T. 469 (Bom.) Issues Involved:1. Utilization of Additional Excise Duty (Textile and Textile Articles) [AED(T&TA)] credit.2. Time period for utilization of AED(T&TA) credit.3. Remanding of proceedings for duty recasting.4. Imposition of penalty under Rule 25 of the Rules.Detailed Analysis:Issue 1: Utilization of AED(T&TA) CreditThe core question was whether the Appellate Tribunal was correct in holding that the credit of AED(T&TA) paid on inputs was always allowed to be utilized only for the payment of AED(T&TA) and for no other purpose. The Tribunal concluded that AED(T&TA) could not be cross-utilized for paying Basic Excise Duty (BED) or Additional Excise Duty (Goods of Special Importance) [AED(GSI)]. The Tribunal's interpretation was based on the plain language of Rule 57AB(2)(b) and Rule 3(6)(b) of the Cenvat Credit Rules, which restricted the utilization of AED(T&TA) credit exclusively for AED(T&TA) payments. The court upheld this interpretation, emphasizing that the legislative intent was to maintain separate accounts for different types of excise duties, thus preventing cross-utilization.Issue 2: Time Period for Utilization of AED(T&TA) CreditThe Tribunal held that AED(T&TA) credit was allowed to be utilized only during October 2000 to June 2001 and not beyond. The court noted that the credit balance as of April 1, 2000, and further credits taken up to June 30, 2001, were not utilized until January 2003. The court found that the Tribunal correctly interpreted the relevant rules and notifications, concluding that the utilization of AED(T&TA) credit beyond the specified period was impermissible. The court emphasized that the introduction of the word 'respectively' in Rule 3(6)(b) from July 1, 2001, reinforced the restriction on cross-utilization.Issue 3: Remanding of Proceedings for Duty RecastingThe Tribunal decided against remanding the proceedings for recasting the duty in cash as AED(GSI), concluding that no useful purpose would be served. The court upheld this decision, agreeing with the Tribunal's reasoning that the utilization of AED(T&TA) for AED(GSI) or BED was not permissible. The court emphasized that the legislative framework and the specific rules governing the utilization of excise duty credits did not support the appellant's contention for recasting.Issue 4: Imposition of Penalty under Rule 25 of the RulesThe Tribunal imposed a penalty on the appellant under Rule 25 of the Central Excise Rules, 2001. However, the court found no justification for the imposition of penalties, noting that the challenge to the orders was pursued in good faith. The court observed that the Tribunal had already set aside the penalty imposed on the Deputy General Manager (Administration) of the appellant company, indicating no intentional or deliberate act on the part of the company or its officers. Consequently, the court deleted the penalties imposed on the appellant, answering this issue in favor of the assessee.Conclusion:The court dismissed the appeals, upholding the Tribunal's interpretation of the rules concerning the utilization of AED(T&TA) credit and the specified time period for such utilization. The court also agreed with the Tribunal's decision not to remand the proceedings for duty recasting. However, the court set aside the penalties imposed on the appellant, finding no intentional wrongdoing. The questions of law were answered in favor of the Revenue, except for the issue of penalties, which was decided in favor of the assessee.