Tribunal affirms taxpayer's right to retain unutilized deemed credit in Cenvat Credit Account

The Tribunal upheld the Commissioner (Appeals) decision, citing established legal precedents and the non-lapsing nature of deemed credit earned before the withdrawal of the scheme. The appeal filed by the Revenue was rejected, affirming the Respondent's right to retain the unutilized deemed credit in the Cenvat Credit Account.

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Issues:
Revenue appeal against Commissioner (Appeals) order setting aside adjudication order disallowing deemed credit taken by the Respondent prior to 01.04.2003 under Notification No. 52/2001-C.E. (N.T.).

Detailed Analysis:

Issue 1: Deemed credit availed by the Respondent prior to 01.04.2003:
The Respondent was engaged in the manufacturing of Cotton Fabrics, Man Made Fabrics, and Processed Knitted/Crocheted Cotton Fabrics classified under Chapter 52, 54, 55, and 60 of the Central Excise Tariff Act, 1985. Before 01.04.2003, the Respondent availed deemed credit under Notification No. 52/2001-C.E. (N.T.) dated 29.06.2001. The said notification was rescinded on 01.04.2003, allowing Composite Mills to take actual CENVAT credit on inputs used in manufacturing finished goods. The Adjudicating Authority disallowed the unutilized deemed credit in the Cenvat Credit Account and imposed a penalty. However, the Commissioner (Appeals) set aside the adjudication order and allowed the appeal filed by the Respondent.

Issue 2: Precedents and Legal Position:
The Tribunal noted that the issue was settled based on the decisions of the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Ahmedabad-II vs Omkar Textile Mills Pvt. Ltd. and the Tribunal's decision in the case of Commissioner of Central Excise, Ahmedabad vs Bajaj Processors Pvt. Ltd. The Gujarat High Court held in the Omkar Textile Mills case that deemed credit earned by the assessee before the withdrawal of the scheme cannot lapse. Relying on these precedents, the Tribunal found no reason to interfere with the Commissioner (Appeals) order and rejected the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, citing established legal precedents and the non-lapsing nature of deemed credit earned before the withdrawal of the scheme. The appeal filed by the Revenue was rejected, affirming the Respondent's right to retain the unutilized deemed credit in the Cenvat Credit Account.

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