2010 (10) TMI 1007 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility and quantum of Cenvat credit under Rule 57AC of Central Excise Rules, 1944.
2. Interpretation and applicability of Rule 57AC(2)(c) versus Rule 57Q(3) of Central Excise Rules.
3. Rectification of the Tribunal's order in light of the Supreme Court's decision.

Issue-wise Detailed Analysis:

1. Eligibility and Quantum of Cenvat Credit:
M/s. Saurashtra Chemicals Ltd. (SCL) received generators on 20-10-1998 and installed them in April 2000. At the time of receipt, the credit available was 75% of the total duty, but it could only be availed post-installation. With the amendment of rules effective from 1-4-2000, Rule 57AC of Central Excise Rules, 1944, became applicable. SCL availed 50% of the duty paid, claiming eligibility under the new rule. This was permitted by both the original adjudicating authority and Commissioner (Appeals). The Tribunal and the Gujarat High Court upheld this decision, but the Supreme Court, in its order dated 10-5-2007, decided in favor of the department, limiting the total credit to 75%.

2. Interpretation and Applicability of Rules:
The core issue was whether Rule 57AC(2)(c) or Rule 57Q(3) was applicable. Rule 57AC(2)(c) allowed 50% credit in the first year and the balance in subsequent years, while Rule 57Q(3) limited the credit to 75% of the duty. The Supreme Court clarified that Rule 57AC(2)(c) was applicable but limited the total credit to 75%, not 100%, as initially interpreted by the High Court. The Supreme Court's clarification indicated that the credit should be availed as per Rule 57AC(2)(c), but within the 75% ceiling.

3. Rectification of Tribunal's Order:
The Tribunal's order dated 23-5-2007, which allowed SCL to avail 50% credit in the second year, was challenged by the Revenue. The Gujarat High Court noted that the Supreme Court's decision was not considered in the Tribunal's order and allowed the Revenue to seek rectification. The Tribunal acknowledged that the Supreme Court had already decided the SLP in favor of the department, limiting the total credit to 75%. The Tribunal remanded the matter to the original adjudicating authority to determine the exact amount of credit admissible for the year 2001-2002, ensuring compliance with the Supreme Court's interpretation.

Conclusion:
The total Cenvat credit available to SCL is 75% of the duty paid, with 50% credit admissible in the first year and the balance in subsequent years. The Tribunal's earlier decision was rectified to align with the Supreme Court's ruling. The matter was remanded to the original adjudicating authority to calculate the exact credit for the year 2001-2002, ensuring adherence to the Supreme Court's interpretation and any other relevant issues.