2007 (6) TMI 340 - AT - Central Excise

Summary

Issues Involved:
1. Interpretation of Notification No. 9/2003-CE dated 1-3-2003 regarding concessional rate of duty.
2. Compliance with conditions of the Notification by the appellants.
3. Validity of availing and utilization of Cenvat credit by the appellants.
4. Revenue loss and demand of duty under Section 11A of the Cenvat Rules.

Issue 1: Interpretation of Notification No. 9/2003-CE
The appellants opted for the benefit of Notification No. 9/2003-CE, which required payment of 60% of the normal duty rate till a certain value of clearances. The notification stated that once the option is exercised, it cannot be withdrawn during the financial year. The appellants paid duty at the full rate of 16% before reaching the specified value of clearances, contrary to the notification's conditions. The Tribunal emphasized that the appellants violated the notification's terms by withdrawing the option prematurely to allow buyers to claim more Cenvat credit, causing revenue loss.

Issue 2: Compliance with Notification Conditions
The appellants argued that the notification did not specify any limits on availing and utilizing Cenvat credit. However, the Tribunal held that the conditions clearly stated the procedure for availing the exemption and the consequences of not adhering to those conditions. The Tribunal found that the appellants' actions of paying duty at the full rate before reaching the specified clearance value violated the notification's terms, leading to the rejection of their appeal.

Issue 3: Validity of Cenvat Credit Utilization
The appellants contended that even if they were not entitled to the notification's benefit, they should be allowed to use the Cenvat credit towards duty payment. However, the Tribunal noted that the appellants had paid duty in excess of their liability by choosing to pay at the full rate, and this excess duty could not be considered recoverable. The Tribunal rejected this argument, emphasizing that the appellants could not circumvent the notification's conditions by paying duty at a higher rate.

Issue 4: Revenue Loss and Demand of Duty
The appellants claimed that there was no revenue loss, and therefore, the demand for duty under Section 11A of the Cenvat Rules was unwarranted. However, the Tribunal disagreed, stating that the increased Cenvat credit taken by buyers due to the appellants' actions resulted in revenue loss to the government. Consequently, the Tribunal upheld the Revenue's proceedings for the recovery of irregularly availed Cenvat credit, rejecting the appeal due to lack of merit.

In conclusion, the Tribunal dismissed the appeal, emphasizing the appellants' violation of the notification's conditions, leading to revenue loss and justifying the Revenue's demand for duty payment.