2017 (8) TMI 823 - HC - Central Excise

Utilisation of CENVAT credit - Interpretation of statute - Rule 57F(12) of erstwhile Central Excise Rules, 1994 - Whether credit of Additional Duties of Excise can be utilised towards payment of Basic Excise Duty when N/N. 5/94-C.E. (N.T.), dated 1-3-1994 specifically provides that AED shall be utilised only towards payment of duty of excise leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957? - Held that - by insertion of the said proviso, the effect of Rule 57A and the notification issued thereunder is clearly wiped out. It is no more the requirement of law that credit taken for additional duty paid should be utilised only for clearing the goods if additional duty is to be paid in respect of the said goods also - Since the period concerned in this matter is after the insertion of the proviso, the benefit of the proviso should be extended to the assessee - decided in favor of assessee.

Summary

Issues:
1. Interpretation of whether credit of Additional Duties of Excise can be utilized towards payment of Basic Excise Duty.
2. Examination of whether the Tribunal erred in overlooking the provisions of Notification No. 5/94-C.E. (N.T.), dated 1-3-1994.

Issue 1:
The primary issue in this judgment revolves around the interpretation of whether the credit of Additional Duties of Excise can be utilized towards the payment of Basic Excise Duty. The court analyzed the specific provisions of Notification No. 5/94-C.E. (N.T.), dated 1-3-1994, which restricted the utilization of Additional Duties of Excise only towards specific excise duties under the Act of 1957. The court referred to the Karnataka High Court's interpretation of Rule 57F(12) of the Central Excise Rules, 1994, which was amended to allow the utilization of specified duty towards payment of any other final product, irrespective of actual use in manufacturing, if inputs were received and used after a certain date. The court concluded that the insertion of the proviso effectively nullified the previous requirements, allowing for broader utilization of credit, even if not directly linked to the final product's manufacture.

Issue 2:
The second issue addressed in the judgment pertains to whether the Tribunal erred in disregarding the provisions of Notification No. 5/94-C.E. (N.T.), dated 1-3-1994. The court highlighted that the insertion of the proviso in Rule 57F(12) superseded the previous restrictions, thereby allowing for a more flexible approach in utilizing credits. By citing a similar stance taken by the High Court of Karnataka in a previous case, the court reinforced the interpretation that the benefit of the proviso should extend to the assessee in the present case as well. Consequently, the court ruled in favor of the assessee, emphasizing that the order passed by the Tribunal was in accordance with the law, and the references were answered in favor of the assessee against the revenue department.

In summary, the judgment delves into the nuanced interpretation of statutory provisions governing the utilization of excise duty credits and the impact of subsequent amendments on such provisions. By considering precedents and legal principles, the court elucidated a broader scope for utilizing credits, ultimately ruling in favor of the assessee based on the revised regulatory framework.