2015 (9) TMI 881

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.... the present case, we are concerned with the CENVAT Credit which was earned by the assessee in terms of CENVAT Credit Rules, 2001 which were in existence. These Rules were superseded by new Rules, namely, CENVAT Credit Rules, 2002 (hereinafter referred to as the "Rules, 2002"). It would be relevant to point out here that under the CENVAT Credit Rules, 2001, the assessee was also paying duty @ 8% of the value of the exempted goods cleared by it in lieu of the CENVAT Credit availed by it on the inputs utilized in the manufacture of its goods. The duty was obviously paid on the dutiable products, namely, denatured spirit. The issue pertains to the utilization of the CENVAT Credit which was already accumulated in favour of the assessee at the time when the Rules,2002 were brought into force.The utilization of the major portion of the credit was denied to the assessee by the Adjudicating Authority invoking the provisions of Rule 6 of the Rules,2002.The Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as "the Tribunal"), however, reversed the aforesaid decision of the Commissioner holding that Rule 6 has to be given effect to prospectively and it would not com....

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....Central Excise dated the 25th June, 2003 is availed." "Rule 6. Obligation of manufacturer of dutiable and exempted goods.- (1) The CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2). Provided the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12B of the Central Excise Rules, 2002 on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. (2) Where a manufacturer avails of CENVAT credit in respect of any inputs, except inputs intended to be used as fuel, and manufactures such final products which are chargeable to duty as well as exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of inputs meant for use in the manufacture of exempted goods and take CENVAT credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods. (3) The manufacturer, opting not to maintain sepa....

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....d on capital goods which are used exclusively in the manufacture of exempted goods, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year. (5) The provisions of sub- rule (1), sub-rule (2), sub-rule (3) and sub-rule (4) shall not be applicable in case the exempted goods are either- i. cleared to a unit in a free trade zone; or ii. cleared to a unit in a special economic zone; or iii. cleared to a hundred per cent. export-oriented undertaking; or iv. cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or v. supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95-Central Excise, dated the 28th August, 1995, number G. S R. 602 (E), dated the 28th August, 1995; or vi. cleared for export under bond in terms of the provisions of the Central Excise Rules, 200....

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....r under these rules and be allowed to be utilized in accordance with these Rules.The perusal of this rule leaves no doubt that it allows the utilization of the already earned credit by a manufacturer under the earlier CENVAT Credit Rules, 2001.Then, Rule 3(3) of the Rules, 2002 permits the utilization of the already earned MODVAT credit for payment of any duty of excise on any final product or for payment of duty on inputs or capital goods. Rule 6, which has been relied upon by the Revenue, only speaks of non-availability of the MODVAT credit to a manufacturer after the enforcement of these rules, when he is engaged in the manufacture of exempted goods also falling under heading 22.04 of the Tariff Act. From the perusal of this Rule, it is evident that under the new CENVAT Credit Rule, 2002, no credit shall be allowed to the manufacturer on such quantity of inputs which is used in the manufacturer of exempted goods and those exempted goods have been detailed in clause 3(a) of this rule.This rule nowhere takes away the right of a manufacturer to utilize the already accumulated credit under the earlier CENVAT Credit Rules of 2001.This rule only prohibits the availability of credit ....