2017 (4) TMI 147 - AT - Central Excise

CENVAT credit - it was alleged that the appellant paid Education Cess wrongly by utilizing cenvat credit on inputs and capital goods - demand - Held that - The Hon ble Guwahati High Court in the case of Union of India Vs. Kamakhya Cosmetics & Pharmaceuticals Pvt. Ltd. 2012 (7) TMI 902 - GAUHATI HIGH COURT on the identical issue, dismissed the appeal filed by the Revenue. In that case, the issue involved is that whether the assessee is entitled to utilize CENVAT Credit of Basic Excise duty for payment of Education Cess and it was held that there was no bar to utilize Cenvat credit of Basic Excise Duty for payment of Education Cess - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Allegation of wrongly utilizing CENVAT credit for payment of Education Cess
- Preliminary objection regarding show-cause notices
- Interpretation of relevant case laws on utilizing CENVAT credit for Education Cess

Allegation of wrongly utilizing CENVAT credit for payment of Education Cess:
The appellant, engaged in manufacturing Zarda Scented Tobacco, faced allegations of wrongly utilizing CENVAT credit for Education Cess payment. The authorities confirmed a demand of ?9,60,503 along with interest and imposed a penalty equal to the demand under Rule 15 of Cenvat Credit Rules, 2004. The appellant contended that the show-cause notices were legally flawed and beyond their scope. However, the Tribunal disagreed, emphasizing the clear evidence of misutilization of CENVAT credit against Education Cess payment.

Preliminary objection regarding show-cause notices:
The appellant raised a preliminary objection on the legality of the show-cause notices, arguing that they suffered from a patent error and were not maintainable. The contention was that both authorities exceeded the notices' scope. Despite the appellant's objection, the Tribunal found no grounds to drop the proceedings, citing a possible drafting error in the notices.

Interpretation of relevant case laws on utilizing CENVAT credit for Education Cess:
In analyzing the merit of the case, the Tribunal referred to a judgment by the Hon'ble Guwahati High Court in a similar matter involving the utilization of CENVAT credit for Education Cess payment. The High Court had dismissed the appeal by the Revenue, holding that there was no bar to using CENVAT credit of Basic Excise Duty for Education Cess payment. The Tribunal also considered other decisions and the Supreme Court's admission of an appeal on a similar issue. Ultimately, the Tribunal set aside the impugned order and allowed the appellant's appeal, following the High Court's decision.

This detailed analysis highlights the legal intricacies of the case, focusing on the alleged misuse of CENVAT credit, objections raised by the appellant, and the interpretation of relevant case laws to arrive at a just decision.