2018 (11) TMI 734 - AT - Central Excise

Utilization of CENVAT Credit - whether the credit available in the cenvat book of the assessee can be utilized to discharge duly in terms of Rule 6 of the Rules issued under N/N. 43/2001 ibid? - Whether such amounts, once paid by debit in cenvat credit, can be allowed for recredit? Held that - These issues have come up before the Tribunal in the case of Shree Rajasthan Syntex Ltd. vs. Commissioner of C.Ex, Jaipur-II 2016 (3) TMI 200 - CESTAT NEW DELHI , where it was held that Since the payment of duty on the inputs has to be discharged by appellant in the present case, in the absence of any specific bar, the appellants have utilized the cenvat credit available in the records for this purpose. There is no infirmity in such payment - also it is held that the inputs having been used for the intended purpose of manufacture and clearance of dutiable final products, the credit of such payment is again available to the appellants. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Utilization of cenvat credit for payment of duty on inputs
- Entitlement to recredit of amounts paid by debit in cenvat credit
- Repayment of irregularly utilized cenvat credit
- Entitlement to cenvat credit of duty paid on raw-materials
- Order of payment of cenvat credit once or twice

Analysis:

1. The appeals were filed against the Order-in-Original dated 31.03.2010, challenging different aspects of the decision. The appellant, engaged in manufacturing refined sugar, procured raw sugar and PP bags for export purposes without paying duty under specific rules. Due to market conditions, part of the refined sugar could not be exported as planned. The appellant discharged its duty obligations under Rule 6 by debiting the cenvat credit account and paying the applicable interest. Subsequently, central excise duty was paid on the finished product cleared to the domestic tariff area.

2. The main contention was whether the appellant could utilize the cenvat credit for discharging duty under Rule 6 and if recredit of the debited amounts was permissible. The Revenue argued that the appellant was not entitled to use the cenvat credit for duty payment on raw-materials and that duty paid on raw-materials in cash was a prerequisite for availing cenvat credit. The adjudicating authority ordered repayment of the irregularly utilized cenvat credit and questioned the order for not demanding repayment of the irregularly availed cenvat credit.

3. The appellant cited a decision by the Delhi Bench of the Tribunal in a similar case, where the Tribunal allowed the utilization of cenvat credit for duty payment on raw-materials and for recredit. The Tribunal's earlier decisions supported this argument, leading to the allowance of the appeal on these grounds. The Tribunal emphasized that the appellant had used the cenvat credit for its intended purpose, and since the inputs were used for manufacturing dutiable final products, the credit of such payment was available to the appellant.

4. Following the Tribunal's decision in similar circumstances, the impugned order was set aside as unjustified. Consequently, the appeal filed by the revenue was rejected, and the appeal filed by the appellant was allowed. The Tribunal found no merit in the Revenue's arguments and upheld the appellant's right to utilize the cenvat credit for duty payment on inputs and entitlement to recredit, as supported by legal precedents and the specific rules governing the case.