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2010 (7) TMI 506 - HC - Central ExciseCENVAT credit on Capital goods - Rule 4(2)(a) and (b) of CENVAT Rules 2001 - 50% or 100% credit - Whether the Hon ble CESTAT has committed an error of law in holding that the provision prevailent after 01.03.2002 and prior to 01.04.2000 would be deemed to be in operation during the period when Rule 4(2)(a) and (b) of CENVAT Rules 2001 was in force by relying upon Section 21 and 24 of the General Causes Act 1897 - Refer to the decision of the Hon ble Supreme Court in the case of KOLHAPUR CANESUGAR WORKS LTD VS UNION OF INDIA, held that the order of the Tribunal, which is, directly in conflict with Rule 4(2) of the Cenvat credit Rule cannot therefore, be sustained - The question of law, therefore, is answered in favour of the appellant.
Issues:
Interpretation of CENVAT Rules 2001-2002 regarding availing credit on capital goods and applicability of General Clauses Act 1897. Analysis: The case involved a dispute over the interpretation of CENVAT Rules 2001-2002 concerning the availing of credit on capital goods. The appellant challenged the decision of the Hon'ble CESTAT, which held that the provision prevalent after 01.03.2002 and prior to 01.04.2000 would be deemed to be in operation during the period when Rule 4(2)(a) and (b) of CENVAT Rules 2001 was in force. The Tribunal allowed the first respondent to avail 100% CENVAT credits based on the proviso added to Rule 2(4) of CENVAT Rules 2001. However, the High Court disagreed with this interpretation. The first respondent had availed credit on capital goods under CENVAT Credit Rules 2001-2002, taking 100% credit instead of the mandated 50% as per Rule 2(4)(a) of CENVAT Rules 2001. The dispute arose when the first respondent transferred the goods to another unit after availing the credit. The assessing authority and the first appellate authority held that only 50% of the duty paid in the financial year should have been availed, with the balance to be claimed in subsequent years. The Tribunal, however, allowed 100% credit based on the proviso added to Rule 2(4) after 01.03.2002. The High Court analyzed the relevant provisions of Rule 4(2)(a) and (b) of CENVAT Rules 2001 and emphasized that the first respondent was entitled to avail only 50% of the duty paid on capital goods as per the prevailing Rule on 31.03.2001. The Court highlighted the applicability of Section 38A of the Central Excise Act, which specifies that amendments to rules do not affect previous operations or acquired rights. The Court cited a Supreme Court decision to support the importance of adhering to the clear language and definitions of legal terms. In conclusion, the High Court held that the Tribunal's decision, which allowed the first respondent to avail 100% credit on capital goods, was in direct conflict with Rule 4(2) of the CENVAT Rules 2001. The Court ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. The judgment emphasized the importance of following the specific statutory provisions and not granting relief beyond what is provided under the relevant rules.
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