AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 1426
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....d herein shall be deemed to have been paid and the credit of the declared duty shall be allowed for an amount calculated at the rate of - (a) 50% of the duty of excise leviable under the Central Excise Act, 1944 (1 of 1944), read with any notification for the time being in force, on the final products of cotton (not containing any other textile material) declared herein, (b) 60% of the duty of excise leviable under the Central Excise Act, 1944 (1 of 1944), read with any notification for the time being in force, on the final products other than those specified in sub-clause (a), at the time of clearance of - (i) final products lying in stock in processing factory of a multilocational composite mill as on the 2nd day of June, 1998; or (ii) final products, manufactured from unprocessed or semi-processed fabrics lying in stock in the processing factory of a multi-locational composite mill as on the 2nd day of June, 1998: Provided that no credit under this paragraph shall be taken where the processing factory of the said multilocational composite mill has taken credit in respect of said inputs under any other rule or notification. [Notification No.28/98-CE (NT), dated ....
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.... payment of duty of excise leviable under Central Excise Act on final products declared under the Notification No.29/96. Here I would like to analyse the allegations made against the party as per existing provisions viz-a-viz arguments put forth by the party against each allegation, one by one. The party have stated that prior to 02.06.1998 they were not a composite mill and hence they were entitled for deemed credit alone as per Notification No.29/96. Since, they became composite mill since 02.06.98, they became eligible for actual credit as per para 5(iii) of Notification No.29/96. Accordingly, they took credit under Rule 57-H which was verified by the Central Excise Officers. However, when the Notification No.29/96 was amended vide Notification No.28/98, the party were asked to reverse the actual credit taken by them. Following the directions, the party paid the cerdit of Rs. 1,70,89,884/- (BED) and Rs. 24,71,099/- (AED T & TA) taken on actual basis and took deemed credit of Rs. 1,57,11,626/- on MM Fabrics and Rs. 21,417/- on Cotton Fabrics cleared between 02.06.98 and 20.08.98 It is obvious here that the party have paid back the actu....
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....re is no contravention of any rules I also do not find it justifiable to penalise the party. Accordingly, I order as below. O R D E R The proceedings initiated vide Show Cause Notice No.CEX/R-I/GWL/SCN/99/753 dated 21.01.99 and CEX/RI/ GWL/SCN/2/99/783 dated 29.01.99 are hereby withdrawn. (M.N. DAS) ASSISTANT COMMISSIONER CENTRAL EXCISE, DIVN. GWALIOR. (6) Thus, the Assistant Commissioner was of the opinion that once the party had paid back the actual credit taken by them and took deemed credit, the expression "at the time of clearance" should not have been taken too literally. In other words, the Assistant Commissioner liberally construed the expression "at the time of clearance". (7) This view of the Assistant Commissioner was reversed in appeal by the Commissioner by his order dated 31/3/2003. The Commissioner was of the view that: "06. On scrutiny of these conditions I find that the Notification prescribes principally the above conditions to be satisfied before taking the credit and utilization of the credit for the final products. Unless all the conditions are satisfied no deemed credit is admissible to the respond....
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.... Para-7A of the amending Notification makes it clear that the proviso of that para relates to the goods lying in stock on 2.6.98. Therefore, the Notification was required to be implemented in tems of stock on that date, though the Notification was issued on a much later date on 18.7.98. Therefore, the Revenue's contention that the credit could be taken only at the time of removal of goods cannot find acceptance. The credit would be available with reference to stock on the stipulated date, on 2.6.98, and shall be utilized for payment of duty on the goods cleared on a later date. There is also merit in the contention that the condition of proviso to para 7A remains satisfed. While allowing them deemed credit under Notification No.28/98, jursidctional Superintendent had denied them credit already taken. The consequential reversal of the credit placed them in a position equivalent to that of not availing the credit. This position remains settled by the aforesaid decision of apex Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra)." (10) Evidently, the Tribunal relied on the decision in "Chandrapur Magnet Wires (P) Ltd., Nagpur Vs. Collector of Central Excise, ....
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....e cannot make a debit entry in the credit account before removal of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties paid on the inputs utilised in manufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods." (11) Reliance is also placed by learned counsel for respondent No.1 on the decision in "Commissioner of C.EX., Mumbai-I Vs. Bombay Dyeing & MFG Co. Ltd. [2007 (215) E.L.T. 3 (S.C.)]" wherein the interpretation of Notification No.14/2002-C.E. was under consideration. Whereunder, the assessee had opted for exemption under which grey fabrics, not subjected to any process, were chargeable to nil rate of duty subject to the condition that the said fabrics were made from textile yarn on which appropriate duty o....
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....bleached or mercerised yarn. 2. As mentioned above, this Notification was issued on 28-2-1999. the product of the respondent is covered by the description of goods at Serial No.133 of the Table annexed with the General Exemption Notification. The assessee, however, had utilized the MODVAT credit in the previous two years prior to 28-2-1999. As per the assessee, after the issuance of this notification, no such MODVAT credit was ever taken or utilized. Even the earlier MODVAT credit which was utilised was returned or paid back on 10-1- 2005. In this scenario, question arose as to whether the assessee fulfills the aforesaid conditon in order to become eligible to get the benefit of the Exemption Notification. 3. We note that five-Member Bench of the Tribunal in the case of 'Franco Italian Co. Pvt. Ltd. v. Commisssioner' [2000(120) E.L.T. 792 (T.-LB)] had taken the view that even if the MODVAT credit was utilized but, thereafter, refunded, it would amount to not utilising the said MODVAT credit. Same view has been taken by the High Court of Allahabad in 'Hello Minerals Water (P) Ltd. v. Union of India' [2004 (174) E.L.T. 422 (All.)]. 4. On a s....
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.... of the above decision we are of the opinion that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence the benefit has to be given of the notification granting exemption/rate of duty on the final product since the reversal of the credit on the input was done at the Tribunal's stage. 26. Thus all the Division Benches of the Tribunal have been following the larger Bench decision and have taken a consistent view that reversal of the credit can be made even subsequent to the clearance of the final products. The impugned order dated 1-10-2003 appears to be the only order which is contrary to the consistent view taken so far." (14) In the case at hand, specific findings are recorded by the Assistant Commissioner, Central Excise while regularizing deemed credit, they are in the following terms: "The party have stated that prior to 02.06.1998 they were not a composite mill and hence they were entitled for deemed credit alone as per Notification No.29/96. Since, they became composite mill since 02.06.98, they became eligible for actual credit as per para 5(iii) of Notification No.29/96. Accordingly, they took credit under Rule 57-H....