9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 17 - AT - Central ExciseReversal of CENVAT Credit - exempt goods with 1% duty - applicability of rule 6 of CENVAT Credit Rules, 2004 - whether the discharge of National Calamity Contingent Duty with cess thereon suffices for the purpose of exclusion from the ambit of rule 2(d) of CENVAT Credit Rules, 2004 being exempted goods? - HELD THAT - It is pertinent to note that GSM mobile handsets are excisable and, therefore, discharge of any liability of duty of excise would suffice for eligibility to CENVAT credit of duty paid on inputs used in the manufacture thereof - The absence of levy of any duty other than CENVAT in Central Excise Act, 1944 is unambiguous and it is only the empowerment of section 136 of Finance Act of 2001 that imposes this levy. It would, therefore, appear that the duty of excise referred to rule 2(t) is limited to the duty leviable under Central Excise Act, 1944 except where the CENVAT Credit Rules, 2004 prescribes otherwise. This is made further apparent in rule 3 of CENVAT Credit Rules, 2004 which, while allowing availment of credit of National Calamity Contingent Duty, restricts its utilization in accordance with fifth proviso in rule 3(4) of CENVAT Credit Rules, 2004. In view of this clear segregation of National Calamity Contingent Duty from the general pool of CENVAT credit, the discharge of duty liability under National Calamity Contingent Duty would not qualify the goods to be other than exempted goods - To permit the availment of credit of duties/tax paid on inputs/input services utilized in the manufacture of GSM mobile sets would be tantamount to grant of refund of tax that were collected, under authority of law and in accordance with the provisions of law, at the immediately preceding stage. Thus, the respondent herein is within the ambit of rule 6 of CENVAT Credit Rules, 2004. Ineligibility to CENVAT credit of tax paid on services used in common - legality of recovery in the face of reversal claimed by respondent - HELD THAT - It is seen that the impugned order has not examined the submissions that the obligation under rule 6 of CENVAT Credit Rules, 2004 has been duly discharged by reversal of proportionate credit and that the bar of limitation impedes recovery. The adjudicating authority should have ascertained the correctness of the claim of the respondent that the proportionate of amount of CENVAT credit had been reversed and that interest thereon had been paid before issue of show cause notice. Matter remanded for fresh decision - appeal allowed by way of remand.
Issues Involved:
1. Whether the discharge of National Calamity Contingent Duty (NCCD) with cess suffices for exclusion from the ambit of rule 2(d) of CENVAT Credit Rules, 2004. 2. The legality of recovery in the face of reversal claimed by the respondent. 3. The applicability of the bar of limitation in the recovery process. Issue-wise Detailed Analysis: 1. Discharge of NCCD and Exclusion from Rule 2(d) of CENVAT Credit Rules, 2004: The primary issue revolves around whether the payment of NCCD with cess on 'GSM mobile handsets' suffices to exclude these goods from being classified as 'exempted goods' under rule 2(d) of CENVAT Credit Rules, 2004. The Tribunal noted that 'GSM mobile handsets' are excisable goods, and the discharge of any duty of excise should qualify them for CENVAT credit on inputs used in their manufacture. However, the term 'duty of excise' is not explicitly defined in the CENVAT Credit Rules, 2004, but as per rule 2(t), it adopts meanings from the Excise Act or the Finance Act. The Tribunal emphasized that the Central Excise Act, 1944, does not levy any duty other than CENVAT, and NCCD is imposed under the Finance Act of 2001. Consequently, the Tribunal concluded that the discharge of NCCD does not qualify the goods as other than 'exempted goods' under rule 2(d) of CENVAT Credit Rules, 2004. This interpretation aligns with the scheme of CENVAT credit, ensuring that the burden of indirect taxes is ultimately borne by the consumer. 2. Legality of Recovery and Reversal Claimed by Respondent: The Tribunal examined the respondent's claim that they had discharged their obligation under rule 6 of CENVAT Credit Rules, 2004, by reversing the proportionate credit and paying interest before the issuance of the show cause notice. The impugned order did not assess the correctness of these claims. The Tribunal found this lack of examination problematic and emphasized that the adjudicating authority should have verified the respondent's claims regarding the reversal of proportionate CENVAT credit and the payment of interest. 3. Applicability of the Bar of Limitation: The respondent argued that the show cause notice dated 2nd November 2012, demanding recovery beyond the normal period of limitation, lacked evidence justifying the invocation of the extended period. The Tribunal noted that the impugned order failed to address this contention, which is crucial for determining the legality of the recovery process. The adjudicating authority should have considered whether the demand was time-barred and whether there was sufficient evidence to invoke the extended period. Conclusion: The Tribunal concluded that the respondent is within the ambit of rule 6 of CENVAT Credit Rules, 2004, and their liability is enforceable. However, due to the lack of examination of the respondent's claims regarding the reversal of proportionate credit and the bar of limitation, the Tribunal set aside the impugned order. The matter was remanded to the original authority to reassess these aspects and make a fresh decision. The appeal was disposed of on these terms.
|
