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2019 (1) TMI 665 - HC - Central ExciseCENVAT Credit - time limitation - N/N. 11/95-C.E. (NT) dated 16.03.1995 - Whether the differential duty paid after 16.03.1995 for clearances of excisable goods (components) made before 16.03.1995 will be available as credit to the manufacture of final products (Chassis) in terms of Rule 57E of CEA 44 (OR) whether in view of the Rule 57F(4A) the said credit will be barred? Held that - In terms of Rule 57F(4A) which commence with a non obstante clause any credit excise duty lying unutilized on 16.03.1995 with the manufacturer of tractors or motor vehicles shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods. The assessee s contention is that the credit which accrue to them in August 1995 was much after the date fixed in Rule 57F(4A) of the Rules and therefore the same will not lapse. However one important factor which the assessee has lost sight is that this credit which was earned by the assessee was on account of the payment of CVD as demanded by the Madras Customs in respect of the imports made by the assessee (inputs) and admittedly these imports were prior to 16.03.1995. Therefore the Commissioner was fully justified in holding that had the assessee has correctly paid the CVD at the time of import and availed MODVAT credit this amount would have lapsed as per Rule 57F(4A) of the Rules. The first respondent rightly rejected the assessee s case - the substantial questions are answered against the appellant.
Issues:
1. Interpretation of Rule 57F(4A) of the Central Excise Rules regarding lapsing of unutilized credit. 2. Applicability of Rule 57F(4A) to differential duty paid for clearances of excisable goods before 16.03.1995. 3. Correctness of Tribunal's rejection of claims based on Rule 57F(4A). Issue 1: Interpretation of Rule 57F(4A) of the Central Excise Rules regarding lapsing of unutilized credit: The appeals involve a dispute under Section 35G of the Central Excise Act, 1944, challenging final orders by the Customs, Excise and Service Tax Appellate Tribunal and the Commissioner of Central Excise. The key contention revolves around Rule 57F(4A) of the Central Excise Rules, which states that any credit of specified duty unutilized on 16.03.1995 with a manufacturer shall lapse and not be allowed for duty payment on excisable goods. The appellant argued that this rule does not apply to their case as the credit accrued after the specified date. However, the Court held that the credit earned post-16.03.1995 was due to the payment of countervailing duty (CVD) demanded by Madras Customs for imports made before the cutoff date. Consequently, the Court upheld the Commissioner's decision that the credit would have lapsed as per Rule 57F(4A) had the CVD been correctly paid at the time of import. Issue 2: Applicability of Rule 57F(4A) to differential duty paid for clearances of excisable goods before 16.03.1995: The crux of the matter lies in whether the differential duty paid after 16.03.1995 for clearances of excisable goods made before the same date can be credited towards the manufacture of final products. The appellant argued that Rule 57F(4A) does not apply to their case as the credit was availed based on certificates issued post-16.03.1995. However, the Court emphasized that the credit was a result of pre-16.03.1995 imports for which CVD was paid, leading to the conclusion that the credit would have lapsed as per Rule 57F(4A) if the duty had been correctly paid at the time of import. Thus, the Court dismissed the appeals based on this interpretation. Issue 3: Correctness of Tribunal's rejection of claims based on Rule 57F(4A): The Tribunal had previously ruled in favor of the appellant on the same issue, but subsequent decisions went against them, leading to the current appeals. Despite the appellant's arguments and past favorable rulings, the Court held that the credit accrued after 16.03.1995 was a direct result of pre-cutoff date imports and, therefore, subject to lapsing under Rule 57F(4A). The Court rejected the appellant's contentions and upheld the rejection of their claims by the Tribunal, emphasizing that the previous decision did not establish the correct legal principle. Consequently, the appeals were dismissed, and the substantial questions were answered against the appellant. This comprehensive analysis of the judgment highlights the intricate legal interpretations and applications of Rule 57F(4A) in the context of excise duty credit lapsing, providing a detailed understanding of the issues at hand and the Court's reasoning behind its decision.
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