2011 (4) TMI 293 - AT - Central Excise

Adjustment of unutilised credit of AED (T&TA) towards the AED (GSI) - As per the tribunal in the case Gauri Plasticulture P. Ltd.vs. CCE 2006 (22) ELT 199 (T-LB)wherein it was held that refund of unutilised credit is to be made in cash if assessee subsequently is not entitled to use the modvat credit on account of assessee going out of the scheme or on account of closure of factory or any other reason - Hence the appellants were entitled to utilise AED (T&TA) credits towards the payment of basic excise duty in respect of AED (GSI) - Decided in favour of assessee.

Summary

Issues:
Permission for recasting of RG23A part II and PLA denied.

Analysis:
The case involves the appellants appealing against the denial of permission to recast RG23A part II and PLA. The appellants, engaged in the manufacture of leather cloth, purchased polyester cotton yarn on which additional excise duty (textile and textile articles) was paid. After converting the yarn into leather cloth, the appellants were required to pay basic duty as additional excise duty (goods of special importance) Act. The appellants sought to recast RG23A part II and PLA to adjust the unutilized credit of AED (T&TA) towards AED (GSI). The permission was denied citing the absence of provisions for such recasting in Central Excise Rules, 2002 or CENVAT credit Rules, 2002. The Commissioner (Appeals) also upheld the denial, leading the appellants to appeal before the Tribunal.

The advocate for the appellants referred to a previous Tribunal order in a similar case and argued that if an assessee is unable to utilize the credit due to restrictions, a refund should be made in cash. The Tribunal agreed with this argument and held that the appellants should be allowed to adjust the unutilized credit of AED (T&TA) towards AED (GSI). Relying on the precedent set in the case of Vinyl Royal Plasticoates P. Ltd., the Tribunal directed the adjudicating authority to permit the recasting of RG23A part II and PLA. Consequently, the impugned order denying permission was set aside, and the appeal was allowed with consequential relief.

In conclusion, the Tribunal's decision in this case highlights the principle that if an assessee is unable to cross-utilize credit due to restrictions, they should be allowed to adjust the unutilized credit towards the payment of duty. The judgment emphasizes the importance of ensuring fairness and practicality in the application of excise duty rules, especially when it comes to the utilization of credits by manufacturers.