2023 (5) TMI 516 - AT - Central Excise

Tribunal overturns demand for recovery of unutilized CENVAT credit

The Tribunal held that the demand for recovery of unutilized CENVAT credit beyond the specified period was not sustainable as it exceeded the scope of the ... Refund claim - demand arising on the ground of retrospective amendment of Notification 33/99-CE dated 08/07/99 through section 153 of the Finance Act 2003 - HELD THAT:- The said retrospective amendment was upheld by the Hon’ble Guahati High Court vide its Order dated 21/09/2006.The above said amendment envisaged that CENVAT Credit availed shall be payable retrospectively within a period of 30 days from the day the Finance Bill received the assent of the Hon’ble President and in the event of non payment of duty, 15% interest shall be payable from the date immediately after the expiry of the period of 30 days. Accordingly, the impugned order confirmed the demand of 5,34,865/- being the CENVAT credit lying unutilized as on 28/02/2003. The demand in this case has gone beyond 22/12/2002 and sought recovery of CENVAT Credit lying unutilzed as on 28/02/2003. They cited the decision of this Bench in the case of Hunwal Tea Estate Vs Commissioner of central excise, Dibrugarh [2018 (7) TMI 1356 - CESTAT KOLKATA] where under the same facts and circumstances, the Tribunal set aside the demand and allowed their appeal. The aforesaid decision in the case of Hunwal Tea Estate cited by the Appellant is squarely applicable to the facts of this case. The retrospective amendment has validated recovery of CENVAT credit availed for the period from 08/07/99 to 22/12/2002 only. Whereas, the demand in this case has gone beyond 22/12/2002 and demanded recovery of CENVAT credit availed upto 28/02/2003 which is not permissible. The demand in the impugned order is not sustainable and is liable to be set aside - Appeal allowed. Issues:The judgment involves issues related to the retrospective amendment of Notification 33/99-CE dated 08/07/1999 through section 153 of the Finance Act 2003, demand for recovery of unutilized CENVAT credit, and the legality of the demand beyond the specified period.Issue 1: Retrospective Amendment of Notification 33/99-CE:The Appellant availed exemption of Central Excise duty under Notification No.33/99-CE dated 08/07/1999. The said Notification was retrospectively amended by Section 153 of the Finance Act, 2003 to limit the refund to the duty paid less the CENVAT Credit availed of. The amendment also mandated recovery within 30 days from the assent of the Finance Bill 2003. The Appellant was required to pay an amount of Rs.5,34,865 within the specified period.Issue 2: Demand for Recovery of Unutilized CENVAT Credit:The Adjudicating authority passed an order demanding the unutilized balance of CENVAT credit from the Appellant. The Appellant contended that the demand was illegal and not applicable to their case. However, the Hon'ble CESTAT held that the unutilized credit is recoverable and remanded the matter for a fresh decision after providing a reasonable opportunity for hearing.Issue 3: Legality of Demand Beyond Specified Period:The Appellant challenged the demand stating it exceeded the scope of the retrospective amendment which validated recovery of CENVAT credit availed between 08/07/1999 to 22/12/2002 only. The demand sought recovery of credit lying unutilized as on 28/02/2003, which the Appellant argued was impermissible. Citing a similar case, the Tribunal found the demand beyond the specified period unsustainable and set aside the impugned order.The Tribunal, after considering the arguments and perusing the records, held that the demand for recovery of unutilized CENVAT credit beyond the specified period was not sustainable. The demand exceeded the scope of the retrospective amendment and was therefore set aside. The Appellant's appeal was allowed, and the impugned order was overturned.