2012 (3) TMI 355 - AT - Central Excise

Intrepretation area based exemption Notification No. 50/2003-C.E. dated 10-6-2003 - Exemption of NCCD - Held that - Cenvat credit of basic Excise duty was available for utilization for payment of NCCD. The Tribunal s decision in the case of Prag Bosimi Synthetics Ltd. reported in 2007 (5) TMI 434 - CESTAT KOLKATA deals with an identical issue. It stands held that the provisions of Rule 3 of Cenvat Credit Rules do not impose any restriction for utilization of Cenvat credit of basic Excise duty for payment of NCCD. We find that the appellants are entitled to stay on the said ground. Ld. DR s reliance on the Hon ble High Court of Gauhati in the case of Dharampal Satyapal Ltd. reported in 2011 (8) TMI 99 - GAUHATI HIGH COURT is not appropriate inasmuch as in that case it stands held that the Cenvat credit of Education Cess can be utilized only for the payment of Education Cess. The point required to be decided in the present appeal relates to the utilization of Cenvat credit of basic Excise duty for payment of NCCD. On the above point we are of the view that the appellants are entitled for unconditional stay on pre-deposit - Stay granted.

Summary

Issues:
Interpretation of exemption Notification No. 50/2003-C.E. regarding NCCD liability.
Availability of Modvat credit for payment of NCCD.
Dispute on Tribunal decisions and need for reference to Larger Bench.

Interpretation of Exemption Notification:
The appellants, engaged in manufacturing two-wheelers, enjoyed area-based exemption under Notification No. 50/2003-C.E. The dispute centered around the interpretation of the Notification concerning the liability of NCCD. The Revenue contended that the Notification exempted only basic Excise duty, not NCCD, leading to demands against the appellants. The arguments focused on whether NCCD should be considered as duty of Excise and exempted. The appellants sought unconditional stay based on conflicting Tribunal decisions and the availability of Modvat credit for NCCD payment.

Modvat Credit for NCCD Payment:
The appellants argued that even if NCCD was payable, they were entitled to Modvat credit for duty paid on inputs. They relied on a Tribunal decision allowing the use of basic Excise duty credit for NCCD payment, emphasizing that the credit available exceeded the confirmed demand. The Revenue countered, stating the appellants failed to follow the necessary procedure for revenue neutrality.

Dispute on Tribunal Decisions and Larger Bench Reference:
The Tribunal noted conflicting views on NCCD exemption, with some decisions favoring Revenue and others the assessee. The appellants sought a Larger Bench reference due to inconsistent Tribunal decisions and argued that subsequent decisions ignored earlier favorable rulings. While agreeing on the need for a Larger Bench reference, the Tribunal cited a High Court decision emphasizing the payment of Cess despite Excise duty exemption. Ultimately, the Tribunal granted unconditional stay on pre-deposit based on the availability of Cenvat credit for NCCD payment, setting the appeal for final decision promptly due to the significant revenue involved.

This judgment addressed the conflicting interpretations of the exemption Notification, the applicability of Modvat credit for NCCD payment, and the need for a Larger Bench reference due to inconsistent Tribunal decisions. The Tribunal granted unconditional stay based on the availability of Cenvat credit for NCCD payment, emphasizing the need for a prompt final decision due to the substantial revenue at stake.