TaxTMI 
TaxTMI 
2026 (9) TMI 1917
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....nst the Final Orders Nos.1003 and 1004 of 2008 of the Tribunal dated 25.11.2003. The writ petition in WP.No.23840/2004, is filed by the respondent, for a mandamus directing the Revenue, the Commissioner of Central Excise, to implement the aforesaid Final Orders dated 25.11.2003. (2) Since the issue involved in both the Civil Miscellaneous Appeals are one and the same and the writ petition is filed only to implement the orders impugned in the Civil Miscellaneous Appeals, all the three cases are taken up together for hearing and are disposed of by this common judgment. (3) For the sake of convenience, the parties will be referred to as per their array in the Civil Miscellaneous Appeals. (4) The brief facts of the case:- The respondent / MRF Limited is a manufacturer of tyres, tubes and flaps falling under Chapter 40 of the Schedule to the Central Excise Tarrif Act, 1985. The respondent uses unprocessed nylon Tyre Cord fabrics to manufacture processed / dipped rubberized Tyre Cord wrap Sheets [hereinafter referred to as ''TCWS''] which are used in the manufacture of tyres. The tyre manufactured by the respondent attracted Basic Excise Duty [BED] under the Cent....
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....05.1999, the Assistant Commissioner, Central Excise, issued another Show Cause Notice to the respondent for the period from 01.11.1998 to 31.03.1999, for the credit availed by them, totalling a sum of Rs. 1,07,62,274/- towards duty on excise levied under AED [GSI] Act, and the duty levied under the Customs Tariff Act, in lieu of the duty under the AED [GSI] Act and to show cause as to why [1]the credit of Rs. 1,07,62,274/- [One Crore Seven Lakhs Sixty Two Thousand Two Hundred and Seventy Four] as aforesaid should not be disallowed under Rule 57I of the Central Excise Rules, 1944 and [2]a penalty should not be imposed on them under Rule 173Qbb of the said CER, 44 inasmuch as they have taken credit of duty wrongly in contravention of the said Rule 57C. (8) The respondent submitted similar reply to the Show Cause Notice and also, by the letter dated 20.10.1999, requested that the Show Cause Notice may be considered along with their claim for refund. (9) The Assistant Commissioner of Central Excise, by an order dated 21.10.1999, in Order-in-Original No.49/1999, ordered that the respondent was not eligible for credit of AED paid on the grey Tyre Cord wrap fabric and adjust the amo....
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....unal failed to examine the applicability of provisions of Rule 57C to the facts of the case and erroneously concluded that the credit on AED [GSI] could be utilised towards the liability of BED for the relevant period which is contrary to the provisions of Rule 57C of the Central Excise Rules, 1944 and the Notification No.5/94-CE[NT] dated 01.03.1994. The learned counsel further submitted that the Tribunal erred in relying on the Board Circular No.751/67/2003-CD dated 30.09.2003, by misconstruing the Circular as having retrospective operation. The learned counsel further submitted that the Tribunal erred in concluding that Notification No.13/2003 CE[NT] dated 01.03.2003 and the aforesaid Board Circular conferred a fresh right on the respondent overlooking that, the aforesaid Notification had only prospective effect and was not applicable to past cases. The learned counsel further submitted that the Tribunal erred in thinking that the aforesaid Circular enabled the respondent to claim credit of duty on AED [GSI] accrued prior to 01.03.2003, for utilisation towards payment of BED in view of the issuance of the aforesaid Notification. The learned counsel submitted that the Circular di....
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....ad rightly found that Rule 57[C] envisaged that the credit of duty was ineligible only in cases where final product was exempted from duty, since it was not the Revenue's case that the final product, namely, tyre, is exempted from duty. The learned counsel, in other words, submitted that as the final product of the respondent is tyres, which attracts BED under Section 3 of the Central Excise Act, 1944, the bar under Rule 57C for availment of credit of AED [GSI] paid on inputs will not arise. The learned counsel submitted that since the respondent satisfied all the conditions of Rule 57F[13] of the CER, 1944, read with Notification 85/87-CE dated 01.03.1987 as amended, the respondent is entitled to refund of AED [GSI] paid on inputs which were used for manufacture of tyres [final products] which were exported. (17) The learned counsel for the respondent further submitted that the respondent was entitled to re-credit and refund in terms of Section 142 [6][a] of the CGST Act, of the amount of AED [GSI] paid in cash subsequent to the amendment vide Section 88 of the Finance Act, 2004, and recovery under Section 124 of the Finance Act, 2005. The learned counsel further submitted that....
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....01.03.1994 restricted utilisation of AED [GSI] credit to payment of AED [GSI] on final product. He therefore, issued two Show Cause Notices, one dated 02.12.1998 for the period from June 1998 to October 1998 and the other dated 03.05.1999, for the period from November 1998 to March 1999, calling upon the respondent to show cause as to why the credit availed by it, should not be disallowed. (21) The respondent submitted its reply and thereafter, by orders dated 08.02.1999 in Order-in-Original No.1/99 and 21.10.1999 in Order-in- Original No.49/99, the Assistant Commissioner [Central Excise], disallowed both credit and refund claims. Aggrieved by the rejection of the credit and refund claims, the respondent preferred two appeals in Order-in-Appeal Nos.89/99 and 78/2000. Both the appeals were dismissed by the Commissioner ]Appeals], vide orders dated 16.08.1999 and 31.07.2000 respectively. The respondent challenged the appellate orders before the CESTAT, Chennai, and the CESTAT, Chennai, by final orders dated 25.11.2003, in Final Orders No.1003 and 1004/2003, relying on the judgment in Coats Viyella India Limited Vs. CCE, Madurai reported in 1999 [111] ELT 90, held that AED [GSI] cr....
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....h is used in the manufacture of final products [which are exempt from whole of the duty of excise leviable thereon or are chargeable to nil rate of duty] except when the final products are either- (I) cleared to a unit in a Free Trade Zone; or (ii) cleared to a hundred per cent. Export-oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Parks; or (iv) supplied to the United Nations or an international organisation 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. 108/95Central Excises, dated 28th August 1995.'' (26) The second proviso to Rule 57 in General Exemption 62 MODVAT-Inputs/ Outputs [Notification No.5/94 dated 01.03.1994] reads as follows:- ''Provided further that the credit of specified duty insofar 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 ....
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....es that credit of duty cannot be allowed if final products are exempt from duty or chargeable at NIL rate. Therefore, to claim credit, there should be a nexus between the availment of credit and the dutiability of the final product. Keeping in view, the object and the purpose of MODVAT scheme, which is to avoid multi-staged levy of duty paid on inputs for the final products, we are of the view that unless and until the final product is chargeable to duty under AED [GSI] Act, 1957, the credit for specified duty on inputs cannot be availed. At the time when the credit for AED paid on unprocessed nylon tyre cord fabric was claimed, the MODVAT scheme was in force. (30) Further, the second proviso to Clause [2] of the Notification No.5/1994, dated 01.03.1994, provides that the credit of the specified duty insofar as it relates to additional excise duty levied under the AED [GSI] Act, 1957, is allowed only towards payment of duty of excise leviable under the same Act on the final product. In view of the aforesaid second proviso in the Notification No.5/1994, dated 01.03.1994, it is clear that the credit of duty taken for additional duty of excise can be utilised only for the purpose o....
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....uted period and as an amendment to the CENVAT Credit Rules, 2002. The Circular dated 12.03.2003 is also subsequent to the disputed period and therefore, we are of the view that the subsequent Notification and the Circular cannot be given retrospective effect so as to give a fresh right to the respondent since the law during the relevant period was unequivocal that the AED [GSI] credit could not be utilised for discharging any other liability. Further, in the view that we have taken on the basis of the facts of the case and the provisions of Rule 57C of the Central Excise Rules and the Notification No.5/94, dated 01.03.1994, we deem it unnecessary to travel beyond the said provisions and the Notification for the purpose of this case, since the disputed period in the present case relates to 02.06.1998 to 31.10.1998 and 01.11.1998 to 31.03.1999, i.e., much before the CENVAT Rules came into force. (34) The learned counsel for the respondent, relying on Section 88, relating to the amendment of the CENVAT Credit Rules, 2002, submitted that by virtue of retrospective effect given under the said provision, the respondent is entitled to claim credit of the AED [GSI] paid by it towards it....
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....nation:-For the removal of doubts it is hereby declared that the credit of 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 paid on or after the 1st day of April, 2000, may be utilised towards payment of duty of excise leviable under the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 [5 of 1986]''. 1st March 2003. (37) Under Section 88, Clause [1], retrospective effect is given as specified in the Second Schedule. As per the Second Schedule, the AED [GSI] paid on or after 1st April, 2000, alone is allowed to be utilised towards payment of duty of excise leviable under the First or Second Schedule of the Central Excise Tariff Act, 1985. In our view, since the present case, the duty was leviable and paid before the cut-off date, i.e., 01.04.2000, the said provision is inapplicable. The learned counsel for the respondent, in the written submissions has also relied on the subsequent development of law in support of the respondent's case. However, in the view that we have taken, we deem it unnecessary to travel beyond the provisions of the Ru....