2008 (4) TMI 590 - AT - Central Excise

Summary

Issues:
Entitlement to credit of 95% of C.V.D. under Notification No. 14/98 dated 2-6-1998.

Analysis:
The appeal was filed against an order granting the appellants credit of 95% of C.V.D. based on Notification No. 14/98 dated 2-6-1998. The appellants received inputs in April 1998 and availed credit for duty paid through DEPB license. The revenue contended that as duty was initially discharged from the DEPB account, the appellants were not entitled to credit. However, the appellants paid duty in cash in November 1998 and claimed credit. The Central Board of Excise & Customs (CBEC) clarified through Circular No. 421/54/98-CX that the 95% restriction would apply only if inputs were received in the factory after 2nd June 1998. Since the inputs were received in April 1998, the restriction did not apply. The dispute centered on whether the appellants could claim credit for the actual C.V.D. paid or 95% of it. The Board's Circular emphasized that the date of input receipt in the factory determined the applicability of the restriction. As the inputs were received in April 1998, the restriction did not apply, leading to the setting aside of the impugned order and allowing the appeal.

This judgment clarifies the application of Notification No. 14/98 dated 2-6-1998 regarding the entitlement to credit of 95% of C.V.D. The dispute revolved around the timing of input receipt and the subsequent payment of duty by the appellants. The CBEC Circular provided crucial guidance that the 95% restriction applied only if inputs were received in the factory after 2nd June 1998. By receiving inputs in April 1998, the appellants were not subject to this restriction, as highlighted in the Circular. The decision hinged on the interpretation of the Circular in relation to the specific circumstances of input receipt by the appellants in April 1998, ultimately leading to the allowance of the appeal.

In summary, the judgment by the Appellate Tribunal CESTAT, New Delhi, underlines the importance of the CBEC Circular in determining the entitlement to credit of C.V.D. The clarification provided in the Circular regarding the restriction applying only to inputs received after a certain date played a pivotal role in setting aside the impugned order. The timing of input receipt by the appellants in April 1998 was deemed crucial in establishing their eligibility for credit, ultimately resulting in the allowance of the appeal and a favorable outcome for the appellants.