TaxTMI 
TaxTMI 
2014 (3) TMI 45
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....urt, in turn, has remanded the matter to this Tribunal for re-adjudication. 2. Common issue is involved in the first three appeals and fourth appeal is relating to penalty. The issue in brief is that the appellant had accumulated credit of additional duties of excise (textile and textile articles) (hereinafter referred to as 'AED (T&TA)' as on 1.4.2000. In addition, certain credit of the said duty was availed during 1.4.2000 to 30.6.2001. This credit could not be utilized during the period of availment as the goods chargeable to AED (T&TA) were not cleared and hence duty liability was far less than the accumulated credit. The credit was, however, utilized during January 2003 to May 2003 for payment of additional duties of excise (goods of special importance) (hereinafter referred to as 'AEAD(GSI)' and as also basic excise duty leviable under Central Excise Act, 1944. Thus the basic issue involved in the appeals is whether accumulated credit of AED (T&TA) can be cross utilized for payment of duty relating to AED(GSI) and for payment of basic excise duty during January 2003 to May 2003. 3. In the earlier round of litigation in relation to appeal No. E/1963/04, this Tribunal vid....
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....the cross-utilization was not permitted. However, since they had already acquired the vested right to use the accumulated cenvat credit relating to AED(T&TA) for payment of AED(GSI), this right cannot be taken away by the amended Rule and the amended Rule did not have any retrospective effect and, therefore, they have correctly utilized the said accumulated credit of AED(T&TA) for payment of AED(GSI) and as also BED during the period January 2003 to May 2003. The learned Advocate also contended that the said amended provision cannot be given retrospective effect as the Government has no such power under Section 38A of the Central Excise Act. In support of his contention, he quoted the Hon'ble Supreme Court's judgment in the case of Eicher Motors Ltd. vs. UOI reported in 1999 (106) ELT 3 (SC). This also follows from the decision of the Hon'ble Supreme Court in the case of Govind Das reported in 1976 (1) SCC 906 and CIT vs. Shah Sadiq & Sons reported in 1987 (3) SCC 516. 5. The learned AR, on the other hand, opposed the contentions of the appellant. He argued that the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 and the Additional Duties of Excise (Goods o....
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....) could have not been utilized for payment of any other duty. The learned AR further argued that the decision in Reliance Industries (supra) was challenged by the department. An application was made to the Tribunal to refer the point of law to the Hon'ble Gujarat High Court, which was turned down. However, thereafter the department filed reference application to the Hon'ble High Court of Gujarat and the Hon'ble High Court of Gujarat directed the Tribunal to make a reference to the Hon'ble High Court. The matter is pending thereafter, Similarly, in the case of Grasim Industries Ltd. the department requested the Tribunal to make a reference to the Hon'ble High Court of Madhya Pradesh at Indore. The Tribunal refused to make a reference. Thereafter the department approached the Hon'ble High Court and the Hon'ble High Court, in turn, has directed the Tribunal to frame the question of law and refer to it. The matter is pending there. He further stated that these facts were brought to the notice of the Hon'ble Bombay High Court in pursuance of the decision of this Tribunal relating to the first two appeals and after hearing the argument for some time, the matter has been remanded to this ....
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....is presumed that during the period 2000 to 2001, the appellant was entitled to use (which itself is incorrect) the said credit for payment of AED(GSI), the same cannot be made applicable in January to May 2003 when the law specifically prohibited the same. In case of the appellant, majority of the accumulated credit was pertaining to the period before March 2000 wherein the law specifically prohibited. Thus, both at the time of taking the credit as also at the time of utilization, the prohibition existed. In view of the above position, the learned AR stated that the appellant has no case and all the appeals should be dismissed. Ld. AR also submitted that in case of Reliance Industries. (supra), credit was availed and utilized during April 2000-May 2001, unlike the present case and is therefore distinguishable on this count. 6.1 We have considered the rival submissions very carefully. In order to properly appreciate the issue in hand, it will be appropriate to see the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, the Additional Duties of Excise (Goods of Special Importance) Act, 1957 as also the legislative history relating to modvat/cenvat credit. Additi....
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....sp; An Act to provide for the levy and collection of additional duties of excise on certain textiles and textile articles. Be it enacted by Parliament in the Twenty-ninth Year of the Republic of India as follows:- 1. Short title and commencement. -(1) This Act may be called the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. (2) It shall be deemed to have come into force on the 4th day of October, 1978. Definition 2. In this Act, "cotton fabrics", "silk fabrics" "woolen fabrics" "man-made fabrics" and "wool tops" shall have the meanings respectively assigned to them in Item Nos. 19, 20, 21, 22 and 43 of the First Schedule to the Central Excises and Salt 1 of 1944 Act, 1944. Levy and collection of additional duties of excise on certain textiles and textile articles. - 3. (1) When goods of the description mentioned in the Schedule chargeable with a duty of excise under the Central Excise Act, 1944 (1 of 1944), read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable (not being ....
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....sp; (2) 1. Man-made fibres, other than mineral fibres man-made filament yarns, cellulosic spun yarn and non-cellulosic wastes, all sorts as described in Item No. 18 I, 18 II, 18 III and 18 IV respectively of the First Schedule to the Central Excises and Salt Act, 1944. 2. Cotton yarn, all sorts described in Item No. 18A of the First Schedule to the Central Excises and Salt Act, 1944. 3. Woollen and acrylic spun yarn as described in Item No. 18B of the First Schedule to the Central Excises and Salt Act, 1944. 4. Non-cellulosic spun yarn as described in Item No. 18 E of the First Schedule to the Central Excises and Salt Act, 1944. 5. Cotton fabrics 6. Silk fabrics 7. Woollen fabrics 8. Man-made fabrics. 9. Wool tops." Section 3(2) very specifically provides that the said levy is being levied for purposes of the Union and the proceeds thereof shall not be distributed among the States. Further, if we see the schedule, the said Act mainly covers fibre, yarn and specified type of fabr....
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....5), shall be utilized only towards payment of duty of excise leviable under the said Additional Duties of Excise (Goods of Special Importance) Act ; and .......................". From the reading of Rule 57F(12) and the above mentioned clause, it is very clear that there was a specific restriction to utilize the credit of AED(T&TA) for payment of AED(T&TA) alone. Similarly, credit of AED(GSI) was to be utilized only for payment of AED(GSI). The legislative intent was clear. This was also the understanding of the textile industry and the Revenue. With effect from 1.4.2000, the Central Excise Rules relating to credit of duty were redrafted/re-casted and the new Rules included were self-contained inasmuch as various Notifications governing the subjects were also merged in the new Rules. Rule 57AA defined various terms. Rule 57AB specified that a manufacturer of final product shall be allowed to take credit of various types of specified duties. Clause (iii) of Rule 57AB(1) specifically listed additional duty of excise leviable under Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. Similarly, clause (iv) specifically listed addit....
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.... be any intention to permit cross-utilization of AED(T&TA) for payment of AED(GSI) or vice versa. The words "under the said Act" have been used twice and separately for AED(T&TA) and AED(GSI). Even the circulars issued at the time of introduction of new Rules did not indicate any intention to permit cross-utilization of AED(T&TA). Rule 57AG governs the transitional provision. Sub-rule (1) of the said Rule reads as under:- "(1) Any amount of credit earned by a manufacturer under rules 57A,57B or 57Q, as they existed prior to 1st day of April, 2000 and remaining unutilized on that day shall be allowable as CENVAT credit to such manufacturer under these rules, and be allowed to be utilized in accordance with these rules." In 2001, the Government decided to frame separate Cenvat Credit Rules (which were hitherto part of Central Excise Rules) i.e. the Cenvat Credit Rules, 2001. Rule 3 listed various commodities in respect of which cenvat credit would be allowed. Sub-rule (3) of Rule 3 again provides that cenvat credit may be utilized for payment of any duty of excise on any final product. However, sub-rule (6) of Rule 3 puts restriction on the utilization/cross -utili....
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....y can be utilized only for payment of NCC duty. To our mind, the said provisions have specific purpose. These duties are being collected with certain objectives and are required to be accounted for under that head and also used for that purpose. In case credit of such duty is allowed to be used for duty liability of other type, the quantum and purpose of collecting the said duties will get defeated/distorted. For example, if credit of AED (T&TA) is allowed to be used for payment of AED(GSI), the collection of AED(GSI) will come down by an amount equivalent to the cross-utilization of AED (T&TA). Obviously, this will distort the whole collection system. Similar will be the position if credit of NCC duty is allowed to be used for payment of duty liability under AED (T&TA) or AED(GSI). Further, it is also important that there should not be any cascading effect in respect of even individual duties. For example, if AED (T&TA) collected at the fibre stage and again at the yarn or fabric stage, then there would be cascading effect of this levy. In order to balance out the two objectives, the law provided for taking the credit and also has put restriction on utilization of such credit to t....
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....icable and Rule 3(6)(b) very specifically prohibited cross-utilization of the credit. We are in agreement with the learned AR's contention that utilization of the credit will be governed by the law as it stood at the time of utilization. Similarly, availment of credit will be governed by the law on the date of availment. We have through the Hon'ble Supreme Court's judgment in the case of National Engineering Industries ( supra). The facts of this case are similar to the present case though relating to refund. The Hon'ble Supreme Court in the said case has observed as under:- "3. The period for which refund is claimed is from 1976-1977, 1977-1978 and 1978-1979. However, it appears that there was a dispute between the Appellants and the Respondent as to how the benefit under Notification No. 198/76-C.E., dated 16th June, 1976 was to be calculated. This dispute was ultimately decided by CEGAT in favour of the Appellants. The claim for refund had then to be worked out. Pursuant to the decision of CEGAT, the Appellant's claims for refund were taken up for consideration in 1993. By that time Section 11-B had been amended and the doctrine of unjust enrichment had been inco....
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.... said rule as null and void. Here, there is no such thing. The learned Advocate for the appellant has quoted the judgment of the Hon'ble Supreme Court in the case of Govind Das (supra). We have gone through the said judgment. In the said case, a HUF was partner in two firms and assessments for the years 1950-51, 1954-55 and 1956-57 were completed under the old Income Tax Act, 1961 came into force and the Income Tax department determined several liabilities on the members of the HUF. It is in this context that the Hon'ble Supreme Court held that if the liability is so fastened, it would amount to retrospective operation of sub-section (6) of Section 171. Similarly, in the case of Shah Sadiq & Sons (supra), the Hon'ble Supreme Court was dealing about the change in liability with reference to the old Income Tax Act of 1922 and the new Income Tax Act of 1961 and it is in that context that the Hon'ble Supreme Court has held the right to carry forward loss is a vested right and remains unaffected by subsequent amendment. In the present case there was no such right undisputedly till March 2000. Even during the period April 2000 to June 2001 there was no such right and from July 2001, agai....
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....l goods themselves if such inputs are removed as such or after being partially processed or such capital goods are removed as such." Learned counsel has laid stress on the word 'any' preceding 'duty of excise' in the above sub-rule and has argued that credit of AED (T & TA) could be utilised for payment of any other kind of duty of excise. Learned SDR has contested this argument by referring to sub-rule (6). Sub-rule (6), shorn of irrelevant clauses, reads as under : "Notwithstanding anything contained in sub-rule (1), - (a) ......... (b) Cenvat credit in respect of - (i) the additional duty of excise under Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978; (ii) the additional duty of excise under Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957; (iii) the National Calamity Contingent duty under Section 136 of the Finance Act, 2001; and (iv) the additional duty under Section....
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....se Cenvat credit of AED (T & TA) paid on inputs, only for the payment of the same kind of duty on his final products by virtue of the non obstante clause [containing mention of sub-rule (4)] of sub-rule (7) of Rule 3 of the said Rules, he could utilise similar credit for payment of any duty of excise on final products under sub-rule (3) of Rule 3 of the 2001 Rules, unaffected by anything contained in sub-rule (6) of the said Rule, there being no mention of sub-rule (3) in the non obstante clause of sub-rule (6). Though this argument might seem to be impressive superficially, it is found, on deeper analysis, to be inconsistent with the legislative purpose which is writ large on the scheme of the law embodied in the Cenvat Credit Rules. 4 . It is settled law that a provision of law incorporating a non obstante clause containing mention of another provision has overriding effect. It was held to this effect, in the case of Jindal Poly Films Ltd. v. Commissioner of Central Excise, Meerut-II [2006 (198) E.L.T. 3 (S.C.)], by the Hon'ble Supreme Court referring to Rule 57B(1) which read: "Notwithstanding anything contained in Rule 57A, a manufacturer of final products shall....
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....s or for payment of duty on inputs or capital goods themselves if such inputs are removed as such or after being partially processed or such capital goods are removed as such. Sub-rule (6)(b), shorn of the non obstante clause, says that Cenvat credit in respect of (i) AED (T &TA); (ii) AED (GSI) and (iii) NCCD shall be utilised only towards payment of AED (T & TA), AED (GSI) and NCCD respectively. We find that, both the sub-rules deal with utilisation of Cenvat credit and that, while sub-rule (3) is in the nature of a general provision providing for utilisation of Cenvat credit for payment of any duty of excise, sub-rule (6) restricts utilisation of credit to payment of the same kind of duty of excise, that is, credit of AED (T &TA) to be utilised only towards payment of AED (T & TA) on final product. The legislative scheme is that the benefit provided under sub-rule (3) can be availed only to the extent permitted under the restrictive provision viz. sub-rule (6). SDR was right when he argued that the two sub-rules should be read together. 5 . In the result, the appellants could have utilised Cenvat credit of AED (T &TA) only towards payment of the same kind of duty....