2018 (6) TMI 774 - AT - Central Excise

Tribunal denies pre-2015 credit use for excise duty, upholding Rule 3(7)(b) and legislative intent

M/s Wheels Polymer Pvt. Ltd. Versus CCT-II, Delhi

The Tribunal ruled against the appellant, denying the utilization of accumulated Education and Secondary & Higher Education Cess credit for basic ... CENVAT credit of Education and Secondary & Higher Education Cess - cross-utilisation in terms of provisions of Rule 3(7)(b) of Cenvat Credit Rules, 2004 - Held that:- The use of the expression “inserted” and “substituted” will have no bearing inasmuch as the end result of the amendments in Rule 3(7) (b) of Cenvat Credit Rule is the same, whether it has come by way of institution or substitution. Otherwise also, there is no ambiguity in the provisions of law, which are very clear. The amended provision of Rule 3(7)(b) have clearly spelt that the benefit of cross utilisation of cess and higher cess can be permitted only in respect of inputs received on or after 01.03.2015. In the absence of any ambiguity in the language used in the said rule, the assessee’s contention that the legislation intent is required to be looked into, cannot be appreciated. It is well settled law that quasi-judicial authorities cannot step in the shoes of the legislature and cannot fill the lacuna, if any. Benefit cannot be extended - appeal dismissed - decided against appellant. Issues:1. Cross-utilization of Education and Secondary & Higher Education Cess for payment of excise duty.2. Utilization of accumulated credit of Education and Secondary & Higher Education Cess for payment of basic excise duty prior to 01.03.2015.3. Interpretation of Rule 3(7)(b) of Cenvat Credit Rules, 2004.4. Applicability of Notifications No. 12/2015-CE (NT) and No. 22/2015-CE(NT).5. Distinction between High Court decision on services and present case on goods.Detailed Analysis:1. The appellant was engaged in manufacturing excisable goods and utilized Education and Secondary & Higher Education Cess credit for payment of cess on final products. However, cross-utilization of these credits for basic excise duty was not permissible before 01.03.2015 as per Rule 3(7)(b) of Cenvat Credit Rules, 2004.2. Post 01.03.2015, Notifications No. 14/2015-CE and No. 15/2015-CE exempted goods from both types of Cess. The appellant had accumulated credit of around Rs. 49.33 lakhs. Notification No. 12/2015-CE (NT) allowed cross-utilization of Education and Secondary & Higher Education Cess credit for excise duty but only for inputs received after 01.03.2015.3. The appellant utilized accumulated credit of Rs. 1,27,818 for basic excise duty in May and December 2015, before 01.03.2015. Revenue initiated proceedings against this utilization, citing Rule 3(7)(b) and issued a show cause notice proposing to deny the utilization.4. The Commissioner (Appeals) upheld the denial, referring to a clarification by CBEC stating that accumulated credit of Education and Secondary & Higher Education Cess cannot be used post their withdrawal. The High Court also rejected a similar petition, emphasizing that the law does not permit cross-utilization after the cessation of these Cesses.5. The appellant argued for a distinction based on services vs. goods and the language of the notifications. However, the Tribunal found no merit in these arguments, stating that the legislative intent was clear in allowing cross-utilization only for inputs received post 01.03.2015. The Tribunal upheld the impugned order and rejected the appeal, emphasizing the clarity of the law and the absence of ambiguity.In conclusion, the Tribunal ruled against the appellant's utilization of accumulated credit for basic excise duty before 01.03.2015, citing the clear provisions of Rule 3(7)(b) and the legislative intent behind the relevant notifications. The decision emphasized the importance of adhering to statutory provisions and upheld the denial of cross-utilization in this case.