2008 (1) TMI 697 - AT - Central Excise

Summary

Issues:
1. Availing Cenvat Credit after crossing small-scale exemption limit.
2. Demand under Rule 9(2) of the Cenvat Credit Rules, 2002.
3. Interpretation of Rule 9(2) regarding lapsing of excess credit.
4. Applicability of the decision in the case of C.C. Ex., Chandigarh v. CNC Commercial Ltd.
5. Requirement for amending Rule 9(2) for recovery of excess amount.

Analysis:
1. The appellants availed Cenvat Credit on inputs after surpassing the small-scale exemption limit for the financial year 2002-2003, resulting in a credit balance of Rs. 28,594.00 at year-end.
2. The department demanded Rs. 2,23,409.00 from the appellants under Rule 9(2) of the Cenvat Credit Rules, 2002, based on the amount equivalent to Cenvat credit for inputs in stock on 1-4-2003.
3. The appellants argued that Rule 9(2) only allows for deduction of the specified amount from the credit balance, without provision for recovering any excess amount if the balance is insufficient, citing the decision in the case of C.C. Ex., Chandigarh v. CNC Commercial Ltd.
4. After reviewing the case records and the cited decision, the Tribunal found that the decision from the Delhi Bench supports the appellants' position, stating that Rule 9(2) does not permit recalling of already utilized credit or demand for additional payment beyond the balance.
5. Consequently, the Tribunal set aside the impugned order, allowing the appeal and providing consequential benefit to the appellants based on the interpretation of Rule 9(2 as per the decision of the Delhi Bench.
6. The Tribunal suggested that if the Government intends to recover amounts determined under Rule 9(2) in excess of the manufacturer's credit balance, an amendment to the Rule should be made explicitly to address such situations, emphasizing the need for clarity in the rules for recovery procedures.