2016 (6) TMI 869 - AT - Central Excise

Claim of refund of amount of cenvat credit reversed - W.e.f. 1/5/2006 appellant opted for payment of duty as per the Compounded Levy Scheme in terms of notification No. 34/2001-CE dated 28/06/2001 - At the time of opting for the benefit of this notification, there was stock of inputs, work in progress, components inputs, as well as finished goods, containing inputs on which CENVAT Credit was availed. The appellant paid the amount of ₹ 733739/- (CENVAT duty) and ₹ 14675/- (Education Cess) towards reversal of the CENVAT Credit taken on the inputs as on the date of opting for the notification. Subsequently, the appellant claimed refund of such amounts paid which was rejected by the Original Authority. Held that - for availing the Compounded Levy Scheme, no credit of duty paid on raw materials, components parts etc. is allowed to be taken. However, the Revenue expanded the scope by interpreting that the credit of duty on the inputs, contained in work in progress and the finished products lying in the stock on the date of opting for the notification needs to be reversed as condition precedent to avail the benefit of the notification. - the credit of duty taken and utilized in respect of not only inputs in stock, but also contained in finished products as on the date of introducing, the Compounded Levy Scheme is not recoverable. - Refund allowed - Decided in favor of assessee.

Summary

Issues:
Interpretation of Proviso to Para 1 in Notification No. 34/2001 dated 28/6/2001 regarding availing Compounded Levy Scheme and reversal of CENVAT Credit on inputs.

Analysis:
The appellant, a manufacturer of Stainless Steel Cold Rolled Patta/Patti, opted for the Compounded Levy Scheme under notification No. 34/2001-CE dated 28/06/2001, which imposed conditions on availing CENVAT Credit. The dispute arose when the appellant claimed a refund of duty paid towards reversal of CENVAT Credit on inputs, work in progress, and finished goods, which was rejected by the authorities. The central issue revolved around the interpretation of the Proviso to Para 1 of the notification, which prohibited taking credit of duty paid on raw materials, components, machinery, or finished products for cold rolling. The appellant argued that this should not require the reversal of CENVAT Credit on inputs in stock, work in progress, or finished products, citing various tribunal decisions in their favor.

The Tribunal analyzed the Proviso to Para 1 of the notification and concluded that the plain reading indicated that no credit of duty on raw materials, components, etc., could be taken for availing the Compounded Levy Scheme. However, the Revenue interpreted this to include the reversal of duty on inputs, work in progress, and finished products at the time of opting for the notification. The Tribunal disagreed with this interpretation, citing previous decisions that held only unutilized credit was to lapse, not the credit already utilized for duty payment. Referring to cases like CCE Vs. Bhushan Industries Ltd. and Tulsyan NCE Ltd. where similar issues were addressed, the Tribunal found the matter to be settled and allowed the appeal in favor of the appellant, granting consequential relief.

In conclusion, the Tribunal clarified that the Proviso to Para 1 of the notification did not mandate the reversal of CENVAT Credit on inputs, work in progress, or finished products at the time of opting for the Compounded Levy Scheme. The decision was based on established legal principles and interpretations from previous tribunal judgments, providing relief to the appellant in this case.