2010 (9) TMI 242 - AT - Central Excise

Cenvat credit (under AED) - not to utilize the credit availed under AED for any other purpose but for payment of duty under AED only - disputes as regards the utlisation of AED (T&TA) credit towards payment of basic excise duty as also in respect of AED (GSI) and also in respect of the period involved - Held that - set aside the impugned order and remand the matter to the original adjudicating authority

Summary

Issues Involved:
1. Utilization of credit of AED (T&TA) for discharging duty obligation on AED (GSI).
2. Refund of accumulated credit of AED (T&TA) due to inability to use it for AED (GSI) post introduction of Cenvat Credit Rules, 2000.
3. Disputes regarding the period for which credit refund is sought and factual discrepancies in utilization of credits.

Issue 1: Utilization of credit of AED (T&TA) for discharging duty obligation on AED (GSI):
The appellant, engaged in manufacturing leather cloth, purchased polyester/cotton yarn on which AED (T&TA) was paid. After converting the yarn into leather cloth, they were required to pay basic duty and AED (GSI) on the final product. The Deputy Commissioner allowed the credit of AED (T&TA) for payment of AED (GSI) based on Tribunal precedents. The appellant claimed they were instructed not to utilize the credit, leading to accumulation. The Tribunal held that the credit of AED (T&TA) could be used for AED (GSI) as per established precedents. The Deputy Commissioner's directions restricted the credit for AED (T&TA) payment only, and the Tribunal upheld the appellant's claim for cash refund due to inability to cross-utilize the credit.

Issue 2: Refund of accumulated credit of AED (T&TA) post introduction of Cenvat Credit Rules, 2000:
The appellant accumulated credit of AED (T&TA) as they were unable to use it for AED (GSI) post the introduction of Rule 57F/12 under Cenvat Credit Rules, 2000. The authorities rejected the refund claim. The Tribunal found no merit in the Revenue's argument that there was no restriction on credit utilization post show cause notices being dropped. Referring to precedents, the Tribunal held that the appellant, due to Revenue's instructions, had to pay duty out of PLA, justifying the refund claim. The Tribunal directed the original adjudicating authority to verify factual discrepancies and decide on the refund in line with legal principles.

Issue 3: Disputes regarding the period for credit refund and factual discrepancies:
There were disputes regarding the period for which credit refund was sought and factual discrepancies in credit utilization towards basic excise duty and AED (GSI). The Commissioner (Appeals) noted conflicting periods and remanded the matter for verification and decision based on the law declared on legal issues. The Tribunal upheld the need for factual verification and remanded the case to the original adjudicating authority for appropriate action.

This detailed analysis covers the issues involved in the legal judgment, addressing the utilization of credits, refund claims, and factual discrepancies, ensuring a comprehensive understanding of the case.