2015 (6) TMI 662 - AT - Central Excise

Denial of CENVAT Credit - Held that - The provisions of Cenvat Credit Rules, 2004, do not explicitly bar the utilisation of cenvat credit of basic excise duty for discharge of educational cess and secondary and higher secondary education cess for the material period in question - impugned order which upholds disallowance of utilisation of cenvat credit of basic excise duty for payment of education cess and secondary and higher secondary educational cess is incorrect and is liable to set aside. - Decided against Revenue.

Summary

Issues:
Appeals against order of first appellate authority regarding utilization of Cenvat credit for payment of educational cess and secondary & higher secondary education cess.

Analysis:
The appeals were filed by the assessee and the Revenue against the order of the first appellate authority, which were disposed of together since they arose from the same impugned order. The issue revolved around the utilization of credit of basic central excise duty for the payment of educational cess, secondary, and higher secondary education cess during the period under scrutiny. The revenue officers contended that this was incorrect and contravened Rule 3(iv) of the Cenvat Credit Rules 2004, leading to a show cause notice being issued. The adjudicating authority confirmed the disallowance of the utilization of Cenvat credit, a decision that was also upheld in a subsequent appeal.

Upon hearing both sides and examining the records, the Hon'ble Member (Judicial) observed that the issue had been settled by various judicial pronouncements. The Cenvat Credit Rules, 2004, did not explicitly prohibit the utilization of Cenvat credit of basic excise duty for the discharge of educational cess and secondary & higher secondary education cess during the relevant period. The Member cited several cases to support this view, including New India Corpotec vs CCE, CCE vs Madura Industries Textiles, CCE vs Malwa Industries Ltd, Vikram Ispat vs CCE, CCE vs Donear Industries Ltd, and Sun Pharmaceuticals Industries vs CCE. Consequently, the impugned order upholding the disallowance of Cenvat credit utilization was deemed incorrect and set aside.

The Revenue had also filed an appeal on the grounds that no penalty was imposed on the assessee despite the demand being confirmed. However, the Member, having ruled in favor of the assessee based on the legal precedents, found no merit in the Revenue's appeal. Therefore, the appeal filed by the assessee was allowed, while the appeal filed by the Revenue was rejected.