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2019 (10) TMI 957 - AT - Central ExciseCENVAT Credit on opting of notification benefit - disallowance of CENVAT credit that remained as balance when they opted out of the special facility of duty payment enabled by N/N. 29/2004-CE dated 9th July 2004 to avail exemption under N/N. 30/2004-CE dated 9th July 2004 - HELD THAT - CENVAT credit is to be utilized for discharge of liability as prescribed in Central Excise Rules, 2002 and Service Tax Rules, 1994. CENVAT Credit Rules, 2004, with which we are concerned here, would, therefore, not be in breach by maintenance of a record which logs entry of burden of duty borne or inputs procured by the appellant. N/N. 30/2004-CE dated 9th July 2004 exempts the duty on the finished products of eligible manufacturers subject to credit of duty not having been taken on inputs or capital goods used for manufacture of these finished goods. As the credit in balance cannot be used and circular no. 645/36/2002-Cx dated 16th July 2002, which precedes the amendment in CENVAT Credit Rules, 2004, requires that CENVAT credit on inputs would necessarily have to be written off - Appeal dismissed.
Issues: Disallowance of CENVAT credit balance upon opting out of duty payment scheme under specific notifications.
In this case, M/s Raymond Ltd appealed against the disallowance of a CENVAT credit balance of ?5,22,29,835 upon opting out of a special duty payment facility enabled by specific notifications. The appellant argued that they had reversed the CENVAT credit as per the conditions of the notification and that the disputed amount represented the balance at the time of opting for the scheme. They contended that the denial of CENVAT credit was based on rules introduced after their credit was availed, and cited relevant case laws to support their position on the retrospective application of these rules. The respondent, on the other hand, argued that the appellant voluntarily opted out of the duty payment scheme, making them ineligible to retain the accumulated CENVAT credit. The respondent highlighted that the appellant's insistence on retaining the credit seemed to be aimed at claiming a refund, which was not permissible under the law and the conditions of the relevant notification. The main point of contention was the retention of the accumulated CENVAT credit on inputs related to finished goods and work-in-progress, considering that the appellant was no longer manufacturing excisable goods. The Tribunal noted that the rules in question had prospective application and could not be applied retroactively to the credit availed before the rules came into effect. The Tribunal emphasized the importance of compliance with the conditions of the notification that exempted duty on finished products of eligible manufacturers, subject to specific criteria regarding the utilization of CENVAT credit. The Tribunal also pointed out that the appellant's balance credit could not be utilized and referred to a circular requiring the writing off of such credits on inputs. Consequently, the appeal was dismissed, as the Tribunal found no merit in the appellant's arguments. Overall, the judgment focused on the interpretation of relevant rules and notifications concerning the disallowance of CENVAT credit balance upon opting out of a duty payment scheme. The Tribunal emphasized the prospective application of rules, the importance of compliance with notification conditions, and the ineligibility of the appellant to retain the accumulated credit due to their change in manufacturing status.
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