2009 (12) TMI 820 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 9(2) of the Cenvat Credit Rules, 2002
- Requirement of payment under Rule 9(2) upon opting for exemption
- Binding precedent of Tribunal decisions on Rule 9(2) interpretation

Analysis:
1. Interpretation of Rule 9(2): The case involved an appeal against a demand raised by the Department under Rule 9(2) of the Cenvat Credit Rules, 2002. The appellant, a manufacturer, opted for an exemption under Notification No. 8/2003-C.E. and was required to pay an amount equivalent to the Cenvat credit allowed in respect of inputs lying in stock or in process or contained in finished products. The Tribunal clarified that this requirement is not dependent on the legality of credit taken or utilized, emphasizing the mandatory nature of the payment upon opting for full exemption.

2. Payment Requirement under Rule 9(2): The appellant argued that since the credit taken and utilized were valid, no additional payment should be required under Rule 9(2). However, the Department contended that fulfilling the conditions of the exemption, including payment under Rule 9(2, was necessary. The Tribunal upheld the requirement for payment, stating that the liability under Rule 9(2) cannot be affected by the utilization status of the credit balance, emphasizing the distinct nature of recovery provisions under Rule 12 for wrongly taken or utilized credits.

3. Precedent and Tribunal Decisions: The appellant cited a Tribunal decision in a similar case where the demand was set aside based on the correctness of credit taking and utilization. However, the Tribunal in the present case disagreed with this interpretation, noting that the decision was at variance with its views. The Tribunal raised questions of law for reference to a Division Bench, seeking clarity on whether cash payment was necessary if the credit balance was insufficient and whether Rule 9(2) payment was independent of recovery provisions under Rule 12.

In conclusion, the Tribunal's judgment clarified the mandatory payment requirement under Rule 9(2) upon opting for exemption, emphasizing the distinct nature of this provision from recovery rules. The case highlighted differing interpretations of Rule 9(2) and the need for further clarification through a Division Bench reference, indicating the complexity and significance of issues surrounding Cenvat credit rules in excise matters.