TaxTMI 
TaxTMI 
2023 (9) TMI 711
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....The Rules were amended vide Notification No.12/2015-CE(NT) dated 30.04.2015 (hereinafter referred to as the "notification to allow for the utilization of credit of Education Cess (EC) and Secondary and Higher Education Cess (SHEC) paid on inputs or capital goods received in the factory of manufacture of final product on or after 1st day of March, 2015, for the payment of the duty of excise leviable under the First Schedule to the Central Excise Tariff. The contention of the appellant that the sole intention of the issuance of Notification No: 12/2015- CE(NT) dated 30.04.2015 is only for allowing utilization of unutilized Cenvat credit of cesses lying as on 28.02.2015 towards payment of Excise duty is not supported by the provisions of the Rules. The amendment to the notification does not deal with the way the balance of EC and SHEC, lying as on 28.2.2015, could be utilized on or after 01.03.2015. The utilization of the Credit of EC and SHEC lying in balance as on 28.02.2015, for payment of Central Excise duty under the first Schedule of the Central Excise Tariff Act, 1985, on clearances effected on or after 01.03.2015, is not in terms of the provisions of the Rules. The same has, t....
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....otice dated 12.05.2016 was issued to the appellant asking them to show cause as to why- (i) Cenvat Credit amounting to Rs.13,63,480/- (Rupees Thirteen Lakh Sixty Three Thousand Four Hundred Eighty Only) should not be demanded & recovered from them under Rule-14 of the Cenvat Credit Rules, 2004 read with Section-11A(1) of the Central Excise Act, 1944. (ii) Interest on the above amount at appropriate rates should not be demanded & recovered from them under Rule-14 of the CENVAT Credit Rules, 2004 read with Section-11AA of the Central Excise Act, 1944. (iii) Penalty should not be imposed upon them for contravention of the aforementioned provisions of law under Rule-15 of the CENVAT Credit Rules, 2004 read with Section-11AC of the Central Excise Act, 1944." 2.4 This show cause notice was adjudicated by Assistant Commissioner of Central Excise, Division Moradabad by holding as follows:- "(i) I hereby, confirm the demand of CENVAT Credit amounting to Rs.7,41,546.00 (Rupees Seven Lacs Forty One Thousand Five Hundred Forty Six Only) against M/s Genus Paper & Board Ltd., Aghwanpur, Kanth Road, Moradabad under Rule-14 of the CENVAT Credit Rules, 2004 read with Section 11A(1) of the ....
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....04.2015 is reproduced bellow:- "2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 3, in sub-rule (7), in clause (b), after the second proviso, the following shall be substituted, namely:- "Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act: Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act: Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act." 4.3 T....
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....the notification itself then the same can be utilised also in accordance with the terms and conditions contained in that notification and, therefore, it is not permissible to construe the judgment of Gujarat High Court that it has been held therein that the manufacturer could avail of the credits accumulated under both the notifications simultaneously. To the said effect also is the judgment of the Andhra Pradesh High Court on which Mr. Dave placed reliance. The only thing what both the High Courts have held is that the rights acquired or money credit accumulated, is not taken away by rescinding of the notification in question. In fact the decision of the Karnataka High Court in the case of Union of India v. Modern Mills Ltd., 1994 (72) E.L.T. 246 (Kar.) considers and approves the aforesaid decision of the Gujarat High Court and Andhra Pradesh High Court and holds that the accumulated credit would not be ceased with the rescinding of the notification and on the other hand, could be utilised by the assessee towards excise duty payable on its final products thereafter. But it has been further held that the said accumulated credit could be utilised only subject to the conditions to th....
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....ereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co- relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available." 8. The ratio of this case was approved by the Supreme Court in the recent decision of Commissioner of Central Excise, Patna v. New Swadeshi Sugar Mills reporte....
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.... and such benefit should be limited to the duty payable and the production of the self same unit. I, therefore, hold that there is no impediment in getting adjustment of the money credit accrued in respect of the goods manufactured at New Alipore towards duty payable for the goods produced at the Bangannagar factory. It may not be out of place to mention here that both the aforesaid factories are registered and licensed. The aforesaid question is, thus, answered in favour of the petitioner no. 1." "The second writ application being W.P. No. 983(W) of 2003, thus, succeeds. Let there be orders in terms of prayers (a) and (b) of the writ application." "No costs." 11. Therefore, the situation is like this. 12. The Supreme Court in the case of Dai Ichi Karkaria Ltd. on consideration of Rule 57A sub-Rule (1) of the said rules had opined that the unutilised Cenvat credit on the inputs could be utilised for any other final product. This was approved in the New Swadeshi Sugar Mills case by the same Court. 13. This Court on consideration of the notification dated 11th October, 1989 had ruled that Cenvat credit could be utilised in any unit of the same manufacturer. It did not lay d....
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.... kind of duty. In absence of any such notification or legal provision for which necessary power existed in the Central Excise Act, 1944, I am of the view that utilization of the credit by the appellant towards payment of duty cannot be faulted with. 4.7 Even if the above is not agreed too, then also the appellant could not have been asked to pay the same duty twice. If the demand of duty made was to be confirmed against the appellant, as has been done by the impugned orders the re-credit of the same should have been allowed on the Cenvat account of the appellant simultaneously and as per the provisions of CGST Act contained in Section 142 (7) this amount would have to be refunded in cash to the appellants. The said provision of CGST Act is reproduced below: "(7) (a) every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and if any amount becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear o....
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....2 (Del.)] (6) JCB India Limited v. Union of India and Others [2018 (15) G.S.T.L. 145 (Bom.)]. 18. Having heard the rival contentions, I am of the view that the claim of the petitioner is liable to be accepted. Goods and Services Tax was introduced with much fanfare in 2017 with discussions preceding the enactment nearly from 2009 onwards. The scheme of Goods and Services Tax (GST) was to provide a comprehensive indirect tax levy subsuming various indirect tax enactments that had been in force prior thereto. Empowered committees were set up to deliberate extensively on the various details of the GST model to be implemented after taking into account the views of the State and Central Governments. The first discussion paper on GST in India set out the salient features that were incorporated in the report of the Thirteenth Finance Commission issued in December, 2009. Prior to enumerating the Central and the State taxes to be integrated with GST the outline of the model was itself set out in paragraph-5.25 of the report as follows :- 'Thirteenth Finance Commission 2010-2015 Volume I : Report December, 2009 ......... The Model GST Outline of the Model GST 5.25 Keeping....
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....c credit ledgers of assessees, but could not be practically utilised in the absence of an enabling provision. 22. This issue can be clinched in favour of the petitioners for two reasons. The impugned order proceeds on the basis that the petitioner has no entitlement to claim set off of credit and thus denies it. However, such credit continues to be available till such time it is expressly stated to have lapsed. Lapsing is not a concept unknown to the respondents. In fact, there are multiple instances where the Board/Government provides for specified credits to lapse mentioning the exact point in time when the lapsing would commence and/or stipulating other conditions in this regard. 23. That the authorities are conscious of the provisions for lapsing of credit, having utilised them in several situations and instances, is clear from the following instance : 'F. No. 137/72/2008-CX.4, dated 21-11-2008 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Utilization of accumulated Cenvat credit restricted in terms of erstwhile Rule 6(3)(c) of Cenvat Credit Rules, 2004 - Regarding. Kindly refer to your letter....
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....ssessee to carry forward the credit, the authorities cannot now take a stand that such credit is unavailable for use. The provisions of sub-section (1) read with sub-section (8) of Section 140, and the Explanation thereunder make it more than clear that all available credit as on the date of transition would be available to an assessee for set off. 25. The Full Bench of the Supreme Court, in fact, makes this position clear in the case of Eicher Motors and Another v. Union of India and Others [1999 (106) E.L.T. 3] while considering the applicability of Rule 57F. The aforesaid Rule provided for the lapse of credit lying unutilised as on 16-3-1995 stating clearly that such credit would not be allowed to be utilised for payment of duty on any excisable goods, whether cleared for home consumption or export. The proviso to the Rule clarified that such lapsing would not affect credit of duty, if any, in respect of inputs lying in stock or contained in finished products lying in stock on 16-3-1995. The Bench opined that Modvat credit lying to the balance of an assessee represented a vested right accrued or acquired by the assessee. The right in respect of the credit had become absolute a....
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....dit facility thereto has been availed of for the purpose of manufacture of further goods.' The ratio of this judgment is directly applicable to the facts and legal position before me. 28. Great reliance has been placed by the Revenue upon the decision of the Division Bench of the Delhi High Court in the case of Cellular Operators Association of India and Others v. Union of India and Another [W.P. (Civil) No. 7837 of 2016, dated 15-2-2018] [2018 (14) G.S.T.L. 522 (Del.)]. At Paragraph 5, the Bench records the crux of the petitioners' case as follows : '5. ........ The contention is that EC and SHE, which were earlier imposed and then withdrawn from 1st March, 2015 and 1st June, 2015 for excisable goods and taxable services respectively, had been submitted and included in the excise duty and service tax, and therefore, the amount lying in the credit towards EC and SHE should be available for availing CENVAT credit " The arguments stood rejected in the following terms : 16. The decision in the case of Eicher Motors Limited and Another (supra) is distinguishable, for in the said case, what was subject matter of challenge was Rule 57F(4A), which had stipulated that unutilized ....
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....y. As noticed above, in the present case, credit of EC and SHE could be only allowed against EC and SHE and could not be cross-utilized against the excise duty or service tax. In fact, what the petitioners seek is an amendment of the scheme to allow them to take cross utilization of the unutilized EC and SHE upon the two cesses being withdrawn against excise duty and service tax, though this was not the position even earlier. Both EC and SHE were withdrawn and abolished. They ceased to be payable. In these circumstances, it is not possible to accept the contention that a vested right or claim existed and legal issue is covered against the respondents by the decision in Eicher Motors Limited and Another (supra) and Samtel India Limited (supra). The said decisions are distinguishable and inapplicable. 29. Reliance on the case of Cellular Operators Association of India (supra) does not advance the case of the Revenue. The Division Bench in that case was concerned with a prayer for quashing Notification dated 29-10-2015 and for a direction that the credit accumulated on account of EC and SHEC be permitted to be utilised for payment of service tax on telecommunication services. The Be....
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....ht can be said to exist in relation to the accumulated credit of the past. The rule and notifications as they exist need to be followed and do not need any amendment? 31. The argument advanced by the parties was crystallised at Paragraph 5 of the decision to the effect that though the levy on EC and SHEC itself been abolished, they had been 'subsumed' within the rate of tax itself, since the rate of service tax had increased to 12%-14% and excise duty from 12% to 12.50%. Thus according to them since the cesses had been subsumed into the basic tax/duty rate, they should be allowed to set off the accumulated credit of EC and SHEC against the same. 32. This argument was rejected by the Division Bench, that held, after analysing the judgments of the Supreme Court in the case of (i) Hingir-Rampur Coal Company Limited and Others v. State of Orissa and Others [(1961) 2 SCR 537], (ii) B.K. Industries and Others v. Union of India and Others [1993 Supp (3) SCC 621 = 1993 (65) E.L.T. 465 (S.C.)], (iii) Shashikant Laxman Kale and Another v. Union of India and Another [(1990) 4 SCC 366], (iv) Tarlochan Singh Flora v. Wakom (Heathrow) Ltd. ([2006] EWCA Civ 1103, Brooke LJ), that though cess ....
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....lated credit had lapsed, this was not done. The petitioner had been permitted to carry forward the cesses in question without any move whatsoever to state that the credits could not be so carried forward, since they had lapsed. Not having done so, the provisions of Section 140 should be given full effect and meaning. 38. The Revenue has placed reliance upon the conclusions of the Supreme Court in the cases of (i) Jayam and Co. v. Assistant Commissioner and Ors. (AIR 2016 SC 4443) and (ii) ALD Automotive Pvt. Ltd. v. The Commercial Tax Officer and Others [AIR 2018 SC 5235 = 2018 (364) E.L.T. 3 (S.C.)], to state that the grant of ITC cannot be sought for as a right by an assessee and no such right vests in an assessee. 39. There is a material distinction between the cases relied upon by the Revenue and the case before me. In Jayam and Company and ALD Automotive Pvt. Ltd. (supra), the Court was concerned with a claim of Input Tax Credit (ITC) by an assessee. It is in this context that the Benches state that the grant of ITC is a concession which is not admissible to all kinds of sales. Specified transactions are alone entitled to the benefit of ITC on specified situations and th....
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....e reflecting a carry forward of the credit from the closing balance available. The intention, to my mind, is clear, to the effect that the credit reflected in the earlier returns is sought to be permitted to be transitioned, except if specifically barred. The other two conditions under Section 140(8) are that the credit should be admissible as ITC and that credit is freely transferrable inter se the units under centralised registration. These conditions also do not stand in the way of the claim of the petitioner. 44. Thus, in my view, the Revenue has not made out any bar for the transitioning of EC, SHEC and KKC into the GST regime and the petitioner satisfies all conditions both under sub-sections (1) and (8) of Section 140. The embargo placed by Rule 3(7)(b) is long gone with the introduction of GST. Certainly the powers-that-be are conscious of these factors in drafting the new legislation and the specific provision in question i.e., Section 140. 45. Reliance placed by Ms. Nandakumar upon the decision in the case of Union of India and Others. v. Uttam Steel Ltd. [(2015) 13 SCC 209 = 2015 (319) E.L.T. 598 (S.C.)] does not impress. In Uttam Steel (supra) a Division Bench of th....
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....d Services Tax Act, 2017 has seen several amendments. Section 28 of CGST (Central Goods and Service Tax) Amendment Act, 2018 proposes the following amendment, which is reproduced below in entirety. 28. In section 140 of the principal Act, with effect from the 1st day of July, 2017, - (a) in sub-section (1), after the letters and word "CENVAT credit", the words "of eligible duties" shall be inserted and shall always be deemed to have been inserted; (b) in the Explanation 1 - (i) for the word, brackets and figures "sub-sections (3), (4)", the word, brackets and figures "sub-sections (1), (3), (4)" shall be substituted and shall always be deemed to have been substituted; (ii) clause (iv) shall be omitted and shall always be deemed to have been omitted; (c) in the Explanation 2 - (i) for the word, brackets and figure "sub-section (5)", the words, brackets and figures "sub-sections (1) and (5)" shall be substituted and shall always be deemed to have been substituted; (ii) clause (iv) shall be omitted and shall always be deemed to have been omitted; (d) after Explanation 2 as so amended, the following Explanation shall be inserted and shall always be deemed to have been....