2017 (6) TMI 206 - AT - Central Excise

Utilization of Additional Excise Duty (AED) credit - the Revenue took the view that such utilization of credit accrued prior to 1.3.2003 is not in order and proceeded to raise demands for reversal of such AED - Held that - It stands clarified by CBEC vide their circular dated 6.3.2003 that credit availed prior to 1.3.2003 can be used for making payment of CENVAT duty after 1.3.2003. In the subsequent revised circular dated 30.9.2003, it has been clarified that such benefit of utilization after 1.3.2003 will not be extended to the goods received prior to 1.3.2003 but the credit on which availed was on or after 1.3.2003. The entire credit of AED (GSI) disputed in the present case has been availed prior to 1.3.2003. Consequently, we are of the view that the Circular dated 30.9.2003 will have no application to the present facts of the case. Appeal rejected - decided against Revenue.

Summary

Issues:
- Dispute regarding utilization of Additional Excise Duty (AED) credit accrued prior to 1.3.2003 for payment of CENVAT duty.
- Interpretation of Circulars issued by CBEC regarding the utilization of AED credit.
- Appeal filed by Revenue against Order-in-Appeal extending benefit of utilization of AED credit.

Analysis:

1. The appeal before the Appellate Tribunal CESTAT Bangalore involves a dispute concerning the utilization of Additional Excise Duty (AED) credit accrued before 1.3.2003 for payment of CENVAT duty. The respondent, a manufacturer of tyres, tubes, and flaps, availed the credit of AED paid on nylon tyre cord fabrics used in the final products between July 1999 and May 2002. The Revenue contended that the utilization of such credit before 1.3.2003 was not permissible as per the prevailing rules.

2. The Central Board of Excise and Customs (CBEC) issued Circulars clarifying the utilization of AED credit. Circular No.700/16/2003 allowed the use of AED credit accrued before 1.3.2003 for payment of CENVAT duty. However, Circular No.751/67/2003 reversed this clarification based on the Law Ministry's opinion. Subsequently, the CENVAT Credit Rules, 2004, inserted an Explanation allowing the utilization of AED credit for duty of excise leviable under the Central Excise Tariff Act. The Revenue filed an appeal following the revised Circular issued on 30.9.2003.

3. The Tribunal noted that the disputed AED credit was availed by the respondent before 1.3.2003. The Circular dated 30.9.2003 clarified that the benefit of utilization after 1.3.2003 would not apply to goods received before that date. As the entire credit in question was availed before 1.3.2003, the Tribunal held that the Circular dated 30.9.2003 did not apply to the case. The Tribunal upheld the Order-in-Appeal extending the benefit of utilization of AED credit, thereby rejecting the Revenue's appeal.

4. The Tribunal's decision was based on the specific timeline of credit availed by the respondent and the subsequent Circulars issued by the CBEC. By analyzing the applicability of the Circulars and the timing of credit utilization, the Tribunal concluded that the respondent was entitled to use the AED credit for payment of CENVAT duty, as allowed by the prevailing rules and clarifications. The Tribunal's decision provides clarity on the interpretation of Circulars and rules governing the utilization of AED credit in excise matters.