2007 (4) TMI 103 - AT - Central Excise

Cenvat/Modvat - Department contended that the credit of BED can only be utilized for payment of BED and not for AED - Held that department contention was not correct and set aside

Summary

Issues:
Utilization of excise duty credit for payment of additional duty after amendments to Cenvat Credit Rules, 2002.

Analysis:
The case involved two appeals filed by the Department regarding the utilization of excise duty credit for payment of additional duty after certain amendments to the Cenvat Credit Rules, 2002. The respondents had credit of excise duty paid on capital goods and packing materials on 1-3-03, which was the date when excise duty was abolished and additional duty of excise was imposed. Subsequent amendments to Rule 3 of the Cenvat Credit Rules, 2002 allowed for the utilization of Cenvat credit for duty of excise on both capital goods and other inputs, including packing materials. Another amendment permitted credit of additional duty of excise. The lower appellate authority had allowed the credit of basic excise duty to be utilized for payment of additional duty of excise after 24-3-03. The Department contended that the credit of basic excise duty could only be used for payment of basic excise duty and not additional excise duty.

In a similar case decided by the Tribunal, it was established that the credit of basic excise duty available before 24-3-03 could indeed be utilized for payment of additional duty after that date. The Tribunal also noted that the amendment to Rule 3 allowed for the utilization of any duty of excise for payment of any kind of duty of excise, including additional duty. The contention that the amendment to Notification No. 19/2003-C.E. (N.T.) did not permit the use of basic duty credit for paying additional duty was found to be incorrect. The amendment simply specified that credit of additional duty could only be used for paying the additional duty without restricting the utilization of basic duty credit, which was otherwise permissible under Rule 3 of the Cenvat Credit Rules, 2002.

Ultimately, the Tribunal found no merit in the appeals filed by the Department and dismissed them. The decision was based on the interpretation of the relevant rules and amendments, allowing for the utilization of basic excise duty credit for the payment of additional duty of excise after the specified date.