TaxTMI 
TaxTMI 
2009 (3) TMI 370
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....ly sub-rule (4) of Rule 3 of Cenvat Credit Rules, 2002 or sub-rule (1B) of Rule 57AB of the Central Excise Rules, 1944, as it existed during the material time, either the appellant is required to reverse the credit taken on inputs not used in or in relation to the manufacture of dutiable goods or no credit should have been taken on such supply of inputs, which are used for the manufacture of the exempted goods. Further, the appellant had filed the application for remission of duty vide their Letter No. BP/CEX/145/03-04 dated 27-2-2003 under Rule 21 of Central Excise Rules, 1944, but it appeared that they did not reverse the credit as contemplated in the Board's Circular No. 800/33/2004 CX., dated 1-10-2004. The appellant during the period August, 2001 to March, 2006 has removed 863488 kgs. of Gelatin Mass Waste valued at Rs. 14,84,79,560/- without reversing the Cenvat credit availed on said portion of the inputs, which works out to Rs. 2,38,32,217/- (Rs. 2,37,56,730/- being the BED and Rs. 75,487/- the Education Cess). It was concluded that appellants have violated the provisions of Rule 3 of Cenvat Credit Rules, 2004/2002 and Rule 57AB of Central Excise Rules, 1944. 2.1 After c....
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.... said duty, should not be demanded from them under Section 11AB of the Central Excise Act, 1944. (iii) Penalty should not be imposed upon them under Rule 15 of Cenvat Credit Rules, 2004 and Section 11AC of Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002 for the offence committed deliberately. The appellant contested the show cause notices on merits mainly on the ground that there is no need to reverse the Cenvat credit on the inputs, as remission is one thing and Cenvat credit is another thing and also that Rule 57AD straightaway covers the issue in favour of the appellant. The Adjudicating Authority after considering the submissions made by the appellant before him did not accept the contentions and concluded that the appellants are required to reverse the Cenvat credit on the inputs that could be attributable to the gelatin mass waste, on which remission was granted, ordered as under. ORDER (i) I hold that the Modvat/Cenvat credit irregularly availed on the raw material, which have gone into the production of Gelatin Mass Waste, destroyed by incinerating, amounting to Rs. 2,38,32,217/- [Cenvat duty of Rs. 2,37,56,730/- & Ed. Cess of Rs. 75....
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.... is not a final product and hence, reversal of Cenvat credit as sought by the department is totally unwarranted and that the provisions of Cenvat Credit Rules are not applicable in this case. It is also the submission that the present case is covered by the erstwhile Rule 57D of Central Excise Rules, 1944 and the clarification issued by the Board vide Circular F. No. B-4/7/2000-TRU, 3-4-2000. He would rely upon the decision of the Tribunal in the case of CCE, Pune-II v. GES Polymers Pvt Ltd. as reported in 2008 (225) E.L.T. 122 (Tri.-Mumbai). 4. The learned JCDR on the other hand would submit that the reasonings given by the Adjudicating Authority are very clear and she reiterates the same. It is her submission that wherever there is a request for remission of duty, and is granted, the credit availed on inputs used in manufacturing of such goods should have been reversed. The learned JCDR submits that rationale is plain and simple, as the Cenvat credit scheme was introduced for reducing the duty burden on the final product. Hence, when the duty on the finished goods is being remitted, the Cenvat credit should have been reversed, otherwise, it would amount to unintended benefit t....
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....re are no provisions which are para materia to Rule 57D. In the current Cenvat Credit Rules also there are no provisions like Rule 57D of Central Excise Rules, 1944 but we find that the Government of India vide C.B.E. & C. Circular No. B/4/7/2000-TRU, dated 3-4-2000 at the time of enacting new Cenvat Rules had given the following clarification. Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Cenvat Rules - Clarifications - Regarding. 1. As you are aware, Cenvat Rules were notified vide Notification No. 11/2000-C.E. (N.T.), dated 1st March, 2000 and they were to come into force from 1-4-2000. Since then, we have received references from the Commissioners as also from trade and industry, seeking clarification on certain aspects. 2. We have examined these references. Some modifications have now been carried out in the Cenvat rules and the Cenvat rules have now been notified vide Notification No. 27/2000-C.E. (N.T.), dated 31st March, 2000. These come into force w.e.f. 1st April, 2000. 3. The definition of "capital goods" has been revised. The revised definition is comprehensive enough to specifi....
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....the second stage dealer. These dealers should be registered under Rule 52AA of the Central Excise Rules. The other procedural requirements in respect of first stage dealer and second stage dealer will continue as in the case of Modvat rules. 8. In the case of capital goods, the Cenvat rules do not provide installation of capital goods as a pre-requisite for taking Cenvat credit. The credit can be taken as and when the capital goods are received in the factory. For such capital goods which were received prior to 1-4-2000 but not installed up to 1-4-2000 also, the Cenvat credit would also be admissible. It may, however, be noted that in respect of all capital goods whether received on or after 1-4-2000 or those that were received prior to 1-4-2000 but not yet installed, the condition that Cenvat credit only up to 50% of the total admissible amount would be available in the financial year 2000-2001 would apply. The balance of the Cenvat credit in respect of such capital goods can be taken in a financial year subsequent to 2000-2001. 9. Cenvat credit shall also be admissible in respect of additional excise duty payable under the Additional Duties of Excise (Textiles and Textile A....