2006 (12) TMI 430 - AT - Central Excise

Summary

Issues: The judgment involves the utilization of deemed Cenvat credit on textile fabrics processed for export under bond without payment of duty and the question of whether the accumulated deemed credit lapsed after the withdrawal of the facility.

Summary:
The appellants, engaged in processing textile fabrics, availed Cenvat credit including deemed credit under Notification 6/2002-C.E. and utilized it during clearance. They cleared fabrics for export under bond without payment of duty, resulting in an accumulation of deemed credit. The facility of deemed credit was withdrawn in the budget proposal for 2003-2004, making Notification 6/2002 inoperative from 1-4-2003. The appellants utilized the accumulated credit post this date, leading to a show cause notice for recovery of Cenvat credit issued on 9-2-2004. The Deputy Commissioner confirmed the demand, imposing a penalty, which was upheld by the Commissioner (Appeals), leading to the current appeal.

Upon hearing both sides, the Tribunal found merit in the appellants' submission that legally earned Cenvat credit does not lapse and can be utilized. Citing precedents like Kusum Products Ltd. v. UOI and decisions of the Tribunal in similar cases, the Tribunal held that there is no provision for the lapse of unutilized Modvat credit. Consequently, the impugned order was set aside, and the appeal was allowed on 28-12-06.