TaxTMI 
TaxTMI 
2023 (9) TMI 711
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....goods were exempted from payment of EC and SHEC. 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 term....
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....r the months of May, 2015 to July, 2015. 2.3 A show cause notice 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 Roa....
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.... utilization of Cenvat credit, rightly availed by the appellant in respect of Education-cess and Higher Education-cess. Notification No.12/2015-CE(NT) dated 30.04.2015 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 ....
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....dit utilised for payment of duty shall not exceed rupees one thousand per tonne of vegetable products on any individual clearance. When the credits get accumulated in accordance with the rates indicated in 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 ....
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....s, as we read them, that a manufacturer obtains credit for the Excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. 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 o....
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.... maintained by the same manufacturer. Such right really accrues to the asset and it passes to the person who owns such asset. Thus, it is preposterous to suggest that a manufacturer cannot get the credit benefit in respect of the goods manufactured at his different units 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 co....
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.... whereby Central Government has in exercise of this power made any such rules whereby the accumulated-unutilized credit of Education Cess or Secondary and Higher Education Cess with the appellant could have lapsed on the on 01.03.2015 i.e. when these cesses were subsumed in excise duty, or they could not have been utilized for the payment of any 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 ....
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....Ltd. reported in [2015 (4) AIR 505 = 2015 (319) E.L.T. 598 (S.C.)] (3) Jayam and Co. v. Assistant Commissioner and Ors. reported in AIR 2016 SC 4443 (4) ALD Automotive Pvt. Ltd. v. The Commercial Tax Officer and Ors. reported in AIR 2018 SC 5235 = 2018 (364) E.L.T. 3 (S.C.) (5) Cellular Operators Association of India and Others v. Union of India and Another [2018 (14) G.S.T.L. 522 (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 salie....
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....C and SHEC were abolished with effect from 1- 6-2015 and consequently the unutilised credit of EC and SHEC available could not be set off and accumulated. As far as KK cess is concerned there was no specific notification providing for its abolishing. However, since the CGST Act did not provide specifically for the levy of KK cess, as such there was no avenue to claim the same after 1-7-2017. In all three of the aforesaid cases the unutilised portion of EC, SHEC and KKC continued in the electronic 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.....
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....nd that taking of credit and its utilization is a substantive right of a taxpayer under value added taxation scheme. Therefore, in the absence of a clear legal prohibition, this right cannot be denied. Pending issues may be decided accordingly.' 24. In the present case, admittedly, there is no notification/circular/instruction that has expressly provided that the credit accumulated would lapse. Not only this, the credit has been carried forward manually and reflected in the returns from time to time and such accumulated credits stare the Revenue in the face. Having permitted the assessee 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....
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....facture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit 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' cas....
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....e the Rule impugned therein. The legal ratio in Eicher Motors Limited and Another (supra) was followed in Samtel India Limited (supra) wherein amended Rule 57F(17) of the Central Excise Rules, 1944 was challenged. The Rules had postulated lapsing of credit in case of manufactured goods falling under sub-heading 8540.12, though the proviso had provided for credit of duty in respect of inputs lying in stock or contained in finished goods lying in stocks. It was held that the said scheme of credit of input tax, in view of amended provision, could not be made applicable to goods which had already come into existence and under which the assessee had claimed credit facility. 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....
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.... of Rule 3 of CENVAT Credit Rules, 2004 may be made to allow the utilization of balance CENVAT Credit of Education Cess and Secondary & Higher Education Cess towards payment of either duty of excise or Service Tax. Discussion & Decision The conference after discussion and briefing from the officers from the Board noted that it was Government's conscious policy decision to withdraw the Education Cess and Secondary & Higher Education Cess. It is a policy decision to not allow utilization of accumulated credit of education cess and secondary and higher education cess after these Cesses have been phased out. As these Cesses have been phased out and no new liability to pay such Cess arises, no vested right 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%....
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....t of the embargo placed by Rule 3(7)(b) as aforesaid. The Board could well have stated even at that juncture that the credit lapsed, but did not choose to do so. 36. Then again, the Division Bench while considering the rival contentions of the assessee and the Revenue has not anywhere indicated that the credit has lapsed, but only that, in the light of the embargo placed by Rule 3(7)(b), set off/credit as claimed could not be permitted. 37. Thirdly, even after the decision of the Division Bench, there has been no instructions/notification/circular from the Board till date to state that the accumulated credit has lapsed. Thus though there were a good many occasions that presented themselves to the Board to clearly stipulate that the accumulated 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)....
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....urnished returns required under the existing law for six preceding months or (iii) where the said credit relates to goods manufactured and cleared under exemption notifications. These are the only three conditions/embargos that bar the transfer of accumulated credit. The language of Section 140(1) and (8), both make it clear that an assessee to GST is entitled to transition of 'the amount of Cenvat credit carried forward in the return relating to the period ending with the date preceding the appointed date' and this in the present case includes accumulated credit of EC, SHEC and KKC. 43. Section 140(8) which specifically deals with centralised registration also provides for transitioning of credit conditional upon an original or revised return being filed within three months of the appointed date 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 transferr....
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....stries Ltd. v. Union of India [(1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.)] were cited by the Supreme Court in allowing the Revenues' appeal and holding that a dead claim could not be revived by a subsequent benefit. 47. Thus the Revenue argues that the accumulated credit of EC, SHEC and KKC is dead and gone and there is nothing that the assessee could claim as having been carried forward. This argument is rejected. At the risk of repetition, accumulated credit cannot be said to have been wiped out unless there is a specific order under which it lapses. Though there may be embargoes placed by the Statutes and Rules, such as the embargo against cross- utilisation placed by Rule 3(7)(b) of the CCR, the accumulated credit continue in the books of the assessee till specifically wiped out. 48. Finally, the Central Goods and 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 w....