TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 659
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.... Excise (Textiles and Textiles Articles) and for no other purpose? (b) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in holding that credit of AED (T&TA) paid on the inputs was allowed to be utilised only during October, 2000 to June, 2001 and not subsequent thereto? (c) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in remanding the proceedings for the recasting of the duty in cash as AED (GOSI)? (d) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in sustaining the penalty under Rule 25 of the Rules?" 2) These questions will have to be answered in the following factual background:The Appellant manufactures final product, namely, blanket out of woollen fibres. The blankets attract only Basic Excise Duty (for short "BED") and does not attract either Additional Excise Duty (Goods of Special Importance) [for short "AED(GSI)"] or Additional Excise Duty (Textiles and Textile Articles) [for short "AED(T&TA)]. Polyester top is not used in the manufacture of the blanket. Therefore, the polyester top as such is not an input for the blanket. 3) With effect from 1st April, 1....
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....facture of fabrics falling under Chapter 55. 9) The Appellant, inter alia, took the credit of Basic Excise Duty and AED(T&TA) on one of the inputs viz. Manmade tops falling under Chapter 55 of the Tariff Act used in or in relation to the manufacture of yarn from 1st March, 1994. The yarn manufactured by the Appellants was subject to BED and AED(T& TA). 10) With effect from 3rd September, 1996, the Appellants were paying BED and AED(T&TA) on the yarn contained in the grey fabric at the time of clearance thereof by reason of the fact that the grey fabric was exempt from payment of duty, both under the Central Excise Act, and the Additional Duty of Excise payable under the Additional Duties of Excise (Goods of Special Importance) Act. 11) The Appellant started manufacturing processed fabrics with effect from March, 1998. The Appellant utilised the credit of BED paid under section 3 of the Act on the tops towards the payment of BED and the additional duty of excise payable under the Additional Duties of Excise (Goods of Special Importance) Act. However, under a mistake of law, the Appellant did not utilise the credit of AED (T&TA) on the tops towards the payment of duty on any other....
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....2001 dated 21st June, 2001, the Central Government promulgated the Cenvat Credit Rules, 2001 in substitution of Rule 57AA to Rule 57AV providing for Cenvat Credit on inputs. 19) While making the Cenvat Credit Rules, 2001, the Central Government, consciously provided in Rule 3(6)(b) that the credit of additional duties paid under AED (T&A) Act, AED (GOSI) Act, the national Calamity Contingent Duty paid under Section 136 of the Finance Act and additional duty paid under the Customs Tariff Act, the utilisation thereof towards payment of duty on the final product under the above referred Acts respectively and crossutilisation was not permissible. The word "respectively" was inserted in Rule 3(6)(b) for the first time effective from July 1, 2001. 20) By their letter dated February 5, 2003, the Appellants after referring to the aforesaid facts and decision of the Appellate Tribunal in the case of Modi Rubber Limited Versus Commissioner of Central Excise, Meerut reported in 2000 (126) ELT 1222, informed the Range Superintendent of Central Excise that in their view the utilisation of credit of duty paid under the T&TA Act for paying other duties was in order, and sought his guidance on t....
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.... from them on the amount of duty not paid/short paid from the due date of payment under the provisions of section 11AB of CESA, 1944; (d) Penalty should not be imposed under Rule 26 of the Central Excise Rules, 2001 26) The said Notice to showcausecumdemand further proposed to impose penalty on Shri. R. K. Shriyan, the Deputy General Manager (Administration) under Rule 25 of Central Excise Rules, 2001. It was inter alia alleged in the said notice to showcausecumdemand that the Appellant contravened the provisions of Rule 3(6)(b) read with Notification No. 24/99CE( NT) dated 1st March, 2000, inasmuch as the Appellants had wrongly utilised Additional Duty of Excise (T&TA) for the payment of Basic Excise Duty and AED (GOSI) and intentionally evaded the payment of specified duties. 27) The Appellant by its letter dated 9th December, 2003, submitted a detailed reply to the said notice to showcausecumdemand dated 13th August, 2003, inter alia, contending that they were entitled to utilise the accumulated credit of Additional Duty of Excise (T&TA) for payment of Basic Excise Duty and Additional Duty of Excise (GOSI). 28) After granting a personal hearing to the Appellants on 3rd Marc....
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....ellant's stand that the Basic Excise Duty liability is not sustainable in view of the Appellant's submission. The Appellate Tribunal further directed the Respondent to pass fresh orders after extending the Appellants a reasonable opportunity of being heard in their defence. 32) Being aggrieved by the aforesaid order No.A/459/ WZB/05/CI dated 10th May, 2005, the Respondent filed Central Excise Appeal No. 159 of 2007 and 222 of 2007 before this Hon'ble Court only to the extent setting aside of demand of Rs. 66,79,179/by the Appellate Tribunal. 33) By its order dated 29th March, 2012, this Court disposed of the above Central Excise Appeal and other connected appeal as under:" 1. The above appeals were admitted on 10th July, 2008. After the above matter was argued for some time, counsel for both the parties state that by consent the orders impugned in the appeals be set aside and the appeals be restored to file of CESTAT for denovo consideration in accordance with law. Accordingly, the orders impugned in both the Appeals are set aside and the matters are restored to the file of CESTAT for denovo consideration. 2. Both the appeals are disposed of accordingly with no orde....
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....ne, 2001 (Rules 57AA to 57AI). Mr. Sridharan submits that Rule 57AB(2) provided that AED(T&TA) or AED(GSI) paid on input can be utilised for payment of said AED(T&TA) or AED(GSI) on any final products manufactured and this position continued upto 30th June, 2001. Mr. Sridharan submits that construing these provisions, the Customs, Excise and Gold Control Appellate Tribunal (CEGAT), in the case of Reliance Industries Ltd. vs. Commissioner of Central Excise reported in 2002 (150) ELT 479 and Grasim Industries Ltd. vs. Commissioner of Central Excise reported in 2003 (54) ELT 288 held that AED(T&TA) can be utilised for payment of AED(GSI) during this period. By referring to transitional provision Rule 57AG Mr. Sridharan points out that as on 1st April, 2000, the Appellant had approximately 1.7 crores as unutilised balance in AED(T&TA). Further credit of Rs. 1.2 crores (approximately) was taken by the Appellant as AED (T&TA) on polyester top during the period from 1st April, 2000 to 30th June, 2001. The AED(T&TA) balance was not utilised by the Appellant till January, 2003. Between January, 2003 to April, 2003, the Appellant utilised this credit of AED(T&TA) for payment of BED and AED(G....
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....udgment of this Court in the case of CEAT Limited vs. Union of India (Writ Petition No. 9996 of 2014), decided on 23rd December, 2014 to which, one of us, (S.C.Dharmadhikari, J.) is a party. Mr. Sridharan submits that the view taken by the Appellate Tribunal is that AED(T&TA) is levied exclusively for the purpose of Union while AED(GSI) is mainly for the purpose of State. Further erroneous view is cross utilisation of AED(T&TA) for AED(GSI) will be in conflict with the purpose of the Act. The manner of payment of duty and collecting the same are governed by provisions of the Cenvat Credit Rules read with the two Acts. In these circumstances, the reasoning of the Tribunal is exfacie incorrect. Undisputedly, the AED(T&TA) can be paid by utilisation of BED. He relies upon CBEC Circular dated 16th April, 2003. Therefore, there is no substance in the contentions of the Revenue and which are based on an erroneous finding of the Tribunal about distortion of collection/utilisation of the duties. 40) Mr. Sridharan relies upon the settled principle that in taxing statute, there is no room for intendment. In that regard, he relies upon several Judgments of the Hon'ble Supreme Court and w....
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....s:( i) Reliance Industries Ltd. vs. CCE 2002 (150) ELT 479 (T) (ii) Grasim Industries Ltd. vs. CCE 2003 (54) ELT 288 (T) (iii) Eicher Motors Ltd. vs. UOI 1999 (106) ELT 3 (SC) (iv) Aunde Faze Three Autofab Ltd. vs. CCE 2009 (6) ELT 564 (v) Innamuri Gopalan vs. State of A. P. 1962 (2) SCR 888 (vi) V.V.S. Sugars vs. Government of A.P. (1999) 4 SCC 192 (vii) Hemraj Gordhandas 1978 (2) ELT (J250) (viii) CCE vs. Dai Ichi Karkaria Ltd. 1999 (112) ELT 353 (ix) Silk Mills vs. UOI 1995 (80) ELT 507 (Del) (x) CCE vs. Orient Fabrics Pvt. Ltd. (2004) 1 SCC 597 (xi) India Carbon Ltd. vs. State of Assam (1997) 6 SCC 479 (xii) Devi Dass Gopal Krishnan Ltd. 2002 (140) ELT 56 (P&H) 44) On the other hand, Mr. Jetly appearing in each of these Appeals supports the order of the Tribunal and submits that the same records a conclusion which is imminently possible given the nature of the additional duties and their basic distinction. Secondly, the Tribunal has not proceeded by ignoring any binding decision but has given effect to the law which has been brought into effect. The Tribunal thought it fit not to send back the cases because they are fairly old. Once the legal position is clea....
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.... refunds, exemptions from duty, offences and penalties, shall, so far as may be, apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in subsection (1). SECTION 4. Distribution of additional duties among States. SECTION 5. Expenditure to be charged on the Consolidated Fund of India - Any expenditure under the provisions of this Act shall be expenditure charged on the Consolidated Fund of India. SECTION 6. Power to make rules - (1) The Central Government may, by notification in the Official Gazette, make rules providing for the time at which and the manner in which any payments under the provisions of this Act, are to be made, for the making of adjustments between one financial year and another and for any other incidental or ancillary matters. (2) Every rule made under this section shall be laid as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the se....
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....1944 (1 of 1944), and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, so far as may be, apply in relation to the levy and collection of the duties of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules. SECTION 4. Repeal and saving - (1) The Additional duties of Excise (Textiles and Textile Articles) Ordinance, 1978 (4 of 1978), is hereby repealed. (2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed shall be deemed to have been done or taken under the corresponding provisions of this Act." 46) A bare perusal of these two Acts would make it clear that the 1957 Act is to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of the part of the net proceeds thereof among the States, in pursuance of the principles of distribution formulated and the recommendations made by the Finance Commission report. 47) The "additional duties" are defined in this Act under section 2(a) to mean the duties of excise levied ....
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....r, by this very Notification, it has been specified as under:" ..... (2) the credit of specified duty allowed in respect of inputs shall be utilised towards payment of duty of excise leviable under the Central Excises and Salt Act, 1944 (1 of 1944), on the final products or, as the case may be, on the inputs, if such inputs have been permitted to be cleared under rule 57F of the said Rules: Provided that the credit of specified duty in so far as it relates to the additional duty of excise specified under (ii) above or the additional duty specified under (iv)(b) above, allowed in respect of inputs shall be utilised only towards payment of duty of excise leviable under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), on the final products or, as the case may be, on the inputs, if such inputs have been permitted to be cleared under rule 57F of the said Rules: Provided further that the credit of specified duty in so far as it relates to the additional duty of excise specified under (iii) above or the additional duty specified under (iv)(c) above, allowed in respect of inputs shall be utilised only towards payment of duty of excise leviable under....
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....ed to as the said First Schedule), leviable under the Act; (ii) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985, leviable under the Central Excise Act, 1944 in relation to the goods falling under subheading Nos. 2401.90, 2404.40, 2404.50, 2404.99, 5402.20, 5402.32, 5402.42, 5402.43, 5402.52, 5402.62, 8415.00, 8702.10, 8703.90, 8706.21 and 8706.39 of the said First Schedule; (iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978); (iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); and (v) the additional duty leviable under section 3 of the Customs Tariff Act, 1975, equivalent to the duty of excise specified under clauses (i), (ii), (iii) and (iv) above, paid on any inputs or capital goods received in the factory on or after the first day of April, 2000. Explanation - For removal of doubts it is clarified that the manufacturer of the final products shall be allowed CENVAT credit of additional duty leviable under section 3 of the Customs Tari....
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....ound yarn) of polyesters falling under heading No. 54.02 of the said First Schedule, manufactured by an independent texuriser, that is to say, a manufacturer engaged in the manufacture of texturised yarn (including drawtwisted or drawwound yarn) of polyesters falling under heading No. 54.02, who does not have the facility in his factory (including plant and machinery) for manufacture of partially oriented yarn of polyesters falling under subheading No. 5402.42 of the said First Schedule. (d) credit, in respect of additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975), paid on marble slabs or tiles falling under subheading No. 1504.21 or 2504.31 respectively of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) shall be allowed to the extent of thirty rupees per square meter. Explanation - Where the provisions of any other rule or notification provide for grant of partial or full exemption on condition of nonavailability of credit of duty paid on any input or capital goods, the provisions of such other rule or notification shall prevail over the provisions of the rules made under this section." 52) We do not see how, upon a readin....
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..... 98.01 of the First Schedule to the said Customs Tariff Act. (2) Notwithstanding anything contained in subrule (1), the manufacturer or producer of final products shall be allowed to take CENVAT credit of the duty paid on inputs lying in stock or in process or inputs contained in the final products lying in stock on the date on which any goods cease to be exempted goods or any goods become excisable. (3) The CENVAT credit may be utilized for payment of any duty of excise on any final products 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: Provided that while paying duty, the CENVAT credit shall be utilised only to the extent such credit is available on the fifteenth day of a month for payment of duty relating to the first fortnight of the month, and the last day of a month for payment of duty relating to the second fortnight of the month or in case of a manufacturer availing exemption by notification based on value of clearances in a financial year, for payment of duty relating to the entire month. (4) When inputs or capital goods, on which CENVAT cred....
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....edit, in respect of additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975), paid on marble slabs or tiles falling under subheading No. 2504.21 or 2504.31 respectively of the First Schedule to the Tariff Act shall be allowed to the extent of thirty rupees per square metre; (d) The CENVAT credit of the duty paid on the inputs shall not be allowed in respect of texturised yarn (including drawtwisted or drawwound yarn) of polyesters falling under heading No. 54.02 of the First Schedule to the Tariff Act, manufactured by an independent texturiser, that is to say, a manufacturer engaged in the manufacture of texturised yarn (including drawtwisted or drawwound yarn) of polyesters falling under heading No. 54.02, who does not have the facility in his factory (including plant and machinery) for manufacture of partially oriented yarn of polyesters falling under subheading No. 5402.42 of the First Schedule to the Tariff Act. Explanation.Where the provisions of any other rule or notification provide for grant of partial or full exemption on condition of nonavailability of credit of duty paid on any input or capital goods, the provisions of such other rule or no....
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....roduced thus does not make any difference. Mr. Sridharan then relies upon the Cenvat Credit Rules, 2002 and similar stipulation in Rule 3(3) and Rule 3(6) and the insertion of the word "respectively". However, for the reasons that we have set out above, we do not think that any benefit or advantage can be derived from the insertion or introduction of the word "respectively". 56) The attempt of Mr. Sridharan is then to rely upon the Cenvat Credit Rules, 2004 and to demonstrate as to how a manufacturer or producer of final products or provider of textile service is allowed to take credit (Cenvat Credit) of the several dues paid on any input or capital goods received in the manufacture of final products or premises of the provider of output service on or after 10th September, 2004 and any input service received by manufacturer of final product or by the provider of output service on or after 10th September, 2004. Mr.Sridharan submitted that credit of duty paid on the inputs under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 can be utilised for payment of additional duties of excise leviable under the Additional Duties of Excise (Goods of Special Importanc....
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....t prior to 1st April, 2000 for payment of duty under the first and second Schedule to the Central Excise Tariff Act, 1985, but at the same time allowing utilisation of credit of additional excise duty on the same goods paid on or after 1st April, 2000. It is in dealing with such controversy and issue of classification raised by the Petitioner CEAT Limited that the observations in para 38 of this Judgment and which are relied upon by Mr. Sridharan have been made. We do not see how any assistance can be derived from these observations for the purpose of the cross availment or availment of Cenvat Credit in the manner noted by us hereinabove. 58) Then, Mr. Sridharan's reliance on the decisions of the Hon'ble Supreme Court with regard to interpretation of taxing statutes can be of no assistance. We have gone by the plain language of the Cenvat Credit Rules. It is the plain language which enables us to conclude that the availment as sought is not permissible. We have neither made any additions nor subtractions. Therefore, the decisions relied upon by Mr.Sridharan in his written notes/submissions on this point need not be referred any further. 59) Then, the reliance placed by Mr.....
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.... we find no substance in the alternate contention or alternative submission of Mr. Sridharan. Rule 3(3) of the Cenvat Credit Rules, 2002, according to Mr. Sridharan, permitted utilisation of Cenvat Credit for payment of any duty of excise on any final products or for payment of duty on inputs on capital goods themselves, if such inputs are removed as such or after being partially processed or such capital goods are removed as such. Mr. Sridharan submitted that Rule 3(3) was never disturbed nor diluted and the nonPage obstante clause in Rule 3 (6) only rules out the applicability of SubRule (1) of Rule 3 but has no effect on Rule 3(3). We are unable to agree with him because irrespective of this nonobstante clause and which is referable to SubRule (1), the position with regard to availment of credit is spelt out by initial Notification No. 21 of 1999CE (NT) dated 28th February, 1999. Once we have based our conclusions on a reading of this and further Notifications following it so also the plain language of the Rules, then, we do not see any force in this argument. We are therefore of the opinion that there is no substance in the argument that between 1st March, 2002 to 9th September....
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....Central Excise Act, 1944 and the Rules made thereunder including those relating to refunds, exemption from duty, offences and penalties, shall, so far as may be, apply in relation to levy and collection of the additional duties of excise on the goods specified in section 3(1). Such broad and wide stipulation would definitely include interest. We do not see how any assistance can be derived from the Judgment of the Hon'ble Supreme Court, which holds that in the absence of any substantive provision, interest cannot be levied and charged on delayed payment of tax. We are of the view that the language of section 9A of the Customs Tariff Act and particularly section 9A(8) and section 9(7A) of the said Act cannot be of any assistance. The word "interest" specifically having not been included, the argument is that no interest was payable by the Appellant on AED(GSI) paid by the Appellants by utilisation of credit of AED(T&TA). Once the controversy has been understood in proper perspective and of lack of any provision in the statute enabling availing of such credit between January, 2002 to April, 2003 and this utilisation by the Appellant was held to be illegal by concurrent orders, th....
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....iming a refund of the purchase price. Yet special damages have been held permissible to be awarded in respect of interest paid by the plaintiff as due to the defendant's breach subject to the rule of remoteness. The english Law caused considerable debate in India as well, but the matter was set at rest by the enactment of S. 61 of the Sale of Goods Act, 1930. Recovery of interest by way of damages is permissible under subsec. (2) of S. 61 (see Mulla on Sale of Goods Act, Sixth Edition, PP. 6162). Power to award interest by way of damages at a reasonable rate if there be no contract rate specified, or at the contract rate as specified, flows from S. 61 of the Act." Also in this case, there was an unconditional interim order. There was prolonged litigation. The Revenue was deprived of its legitimate and legal dues by continued litigation. Hence, following principles would also govern the grant of interest. In the same Judgment, the Hon'le Supreme Court held as under:" 24. ..... Unless otherwise ordered by the Court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have b....