2013 (4) TMI 184 - HC - Central Excise

The main dispute in this case is whether Tribunal was correct in allowing transfer of deemed credit to Cenvat Credit account once the notification was rescinded, in absence of any transitional provisions. - Appellant had lodged refund of the accumulated deemed credit which was rejected on the ground that the credit of specified duty can only be allowed in respect of inputs used in the final products cleared for export under Bond whereas in the respondent s case the goods had been cleared under Annexure-I for the manufacture of export goods and also that the goods had been cleared at nil rate of duty the claimant would not be entitled to the credit due to the embargo of the provisions of Rule 6 of Cenvat Credit Rules, 2001. Held that - a right, which is acquired as a result of a statutory provision, cannot be taken away retrospectively unless the statutory provision so provides or by necessary implication it has the same effect. Following the decision in Omkar Textile Mills Pvt. Ltd. 2008 (9) TMI 860 - GUJARAT HIGH COURT decided in favor of assessee.

Summary

Issues:
Transfer of deemed credit to Cenvat Credit account without transitional provisions.

Analysis:
The case involved a dispute regarding the transfer of deemed credit to Cenvat Credit account without transitional provisions. The appellant had lodged a refund of accumulated deemed credit, which was rejected by the Assistant Commissioner. The appeal was allowed by the Commissioner (Appeals), directing the refund to the appellant. However, the department challenged this decision, and the CESTAT held that the appellant was not entitled to the refund due to missing documentation. Subsequently, the appellant deposited the refunded amount back and took credit in the Cenvat Credit Account. The department initiated fresh proceedings, alleging the appellant wrongly took Cenvat Credit. The Assistant Commissioner held the credit was taken wrongly, but the Commissioner (Appeals) reversed this decision. The department appealed to the CESTAT, which affirmed the decision of the Commissioner (Appeals).

The main question raised in the appeal was whether the appellant was entitled to retake the credit once the notification was rescinded. The High Court referred to a previous Division Bench decision, which held that a right acquired as a result of a statutory provision cannot be taken away retrospectively unless provided by the statutory provision or by necessary implication. The Court emphasized that altering the scheme retrospectively affects the rights of the parties involved. Therefore, the Court concluded that the appellant was entitled to maintain the credit taken by them even after the rescission of the notifications.

In light of the Division Bench decision and the principles discussed, the Court found no merit in the appeal. It was held that no substantial question of law arose for consideration, and thus, the tax appeal was dismissed.