2009 (12) TMI 760 - AT - Central Excise

Summary

Issues:
1. Failure to surrender Cenvat credit during switching over to a new scheme of SSI exemption benefit.
2. Departure from the substance of the order of Adjudication by the Commissioner (Appeals).
3. Interpretation of transitional provisions safeguarding revenue interests during switching over.

Analysis:

1. The issue in this case revolves around the failure of the assessee to surrender the Cenvat credit when switching over to a new scheme of SSI exemption benefit. The Revenue argues that the assessee should have forfeited the Cenvat credit amounting to Rs. 5,80,587/- hidden in the work in progress (WIP) as per the transitional provisions. The Revenue contends that by availing the exemption benefit without surrendering the credit, the assessee has prejudiced the revenue's interest. The transitional provision was designed to prevent such situations and ensure the surrender of credits to the treasury during switching over.

2. The Commissioner (Appeals) is criticized for departing from the substance of the Adjudication order. It is noted that the Commissioner did not consider the Cenvat credit in WIP as highlighted in the show cause notice. The Commissioner's observation that the assessee did not benefit from the Cenvat credit is deemed inconceivable given the evidence presented in the show cause notice. The order of the Commissioner is seen as lacking a thorough examination of the allegations and substance of the case.

3. The Tribunal emphasizes the importance of the transitional provisions during the switching over period to a different scheme. The purpose of these provisions is to safeguard revenue interests and prevent undue enrichment by the assessee. It is reiterated that an assessee cannot claim duty paid on cenvatable input when enjoying exemption benefits unless permitted by law. The Tribunal stresses that loose interpretations of such provisions should not jeopardize revenue interests and that any benefit derived should align with the statute's purpose. Consequently, the matter is remanded back to the Commissioner (Appeals) for a detailed review based on the discussions in the Adjudication order.

In conclusion, the judgment highlights the significance of adhering to transitional provisions during scheme changes to avoid prejudice to revenue interests and ensure compliance with the law. The decision underscores the need for a thorough examination of all relevant factors and evidence to reach a reasoned and fair outcome in such cases.