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2023 (9) TMI 711 - AT - Central Excise


Issues Involved:
1. Utilization of Cenvat Credit of Education Cess and Secondary and Higher Education Cess (EC and SHEC) post 01.03.2015.
2. Demand and recovery of Cenvat Credit utilized.
3. Imposition of interest and penalty on the appellant.

Issue 1: Utilization of Cenvat Credit of EC and SHEC post 01.03.2015

The appellant utilized Cenvat credit of EC and SHEC amounting to Rs. 13,05,381/- lying in balance as on 01.03.2015 towards payment of Central Excise duty for May to July 2015. The Commissioner (Appeals) held that the utilization of such credit for payment of Central Excise duty post 01.03.2015 was not in terms of the provisions of the Rules. The appellant contended that Notification No. 12/2015-CE(NT) dated 30.04.2015 allowed such utilization, but the Commissioner (Appeals) disagreed, stating the notification did not address the balance credit as on 28.02.2015.

Issue 2: Demand and Recovery of Cenvat Credit Utilized

A show cause notice dated 12.05.2016 demanded recovery of Rs. 13,63,480/- under Rule-14 of the Cenvat Credit Rules, 2004 read with Section-11A(1) of the Central Excise Act, 1944. The Assistant Commissioner confirmed the demand for Rs. 7,41,546/- along with interest and imposed a penalty of Rs. 74,155/-.

Issue 3: Imposition of Interest and Penalty

The Commissioner (Appeals) set aside the penalty, citing that the issue involved interpretation of the Rules and notification regarding utilization of EC and SHEC lying in balance as on 28.02.2015. The CESTAT in the case of Commissioner of Central Excise, Surat-I Versus Prime Furnishing Pvt Ltd. held that no penalty is imposable where the issue is capable of different interpretations.

Judgment:

The Tribunal considered the appellant's argument that Notification No. 12/2015-CE(NT) should be interpreted to allow utilization of the credit for payment of Central Excise duty, aligning with the Hon'ble Finance Minister's Budget Speech which subsumed EC and SHEC into the Central Excise duty. The Tribunal noted that there was no provision stating that the credit would lapse or could not be used post 01.03.2015.

The Tribunal referenced several judgments, including the Supreme Court's decision in Tungbhadra Industries and the Kolkata High Court's decision in Rasoi Ltd., which supported the view that accumulated credit does not lapse without specific legal provisions.

The Tribunal concluded that the utilization of the credit by the appellant was justified and set aside the impugned order. The appeal was allowed, and the demand and penalty were annulled. The Tribunal emphasized that if the demand were confirmed, the appellant would be entitled to a refund under Section 142 (7) of the CGST Act, 2017.

 

 

 

 

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