2021 (8) TMI 697 - AT - Central Excise

CENVAT Credit - seeking reversal of amount of cenvat credit availed under head AED (GSI) - recovery of interest u/s 11 AB of Central Excise Act on the amount of AED (GSI) wrongly availed - levy of penalty - HELD THAT - The issue involved in the matter is no longer res-integra. In their own case reported at COMMISSIONER OF C. EX. MUMBAI-III VERSUS CEAT LTD. 2010 (3) TMI 621 - CESTAT MUMBAI same issue has been decided holding in their favour. This order of tribunal was upheld by the Hon ble Bombay High Court as reported at 2013 (7) TMI 568 - BOMBAY HIGH COURT where it was held that In terms of the provisions enacted in Finance Act 2004 the debits were held not amounting to payment of duty and the assessee was required to meet the same obligation by payment from PLA. In the instant case the debits were held to be of no consequence when the assessee was required to pay duty initially discharged using AED (GSI) credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of cenvat credit under Rule 14 of Cenvat Credit Rules, recovery of interest under section 11AB of Central Excise Act, imposition of penalty under Rule 15 of Cenvat Credit Rules.

Analysis:
The appeal challenged an order disallowing cenvat credit of a specific amount under Rule 14 of Cenvat Credit Rules, ordering recovery of interest under section 11AB of Central Excise Act, and imposing a penalty under Rule 15 of Cenvat Credit Rules. The appellant, a manufacturer of tyres and tubes, availed credit of duty paid on nylon cord fabrics used in tyre manufacturing. The issue arose due to amendments in notifications related to the utilization of modvat credit of Additional Excise Duty (AED). The dispute centered around the utilization of AED credit for payment of other excise duties, such as BED and SED, post the amendment to Rule 3(6)(b) of the Cenvat Credit Rules in 2003. The appellant availed and utilized AED credit, leading to a show cause notice and subsequent adjudication by the Commissioner.

During the appeal, the appellant cited a previous case where a similar issue was decided in their favor by the tribunal and subsequently upheld by the Bombay High Court. The appellant argued that the current issue should be decided in their favor based on the precedent set by the previous judgment. The Authorized Representative for the revenue reiterated the findings of the impugned order disallowing the credit.

The tribunal examined the impugned order, submissions made during the appeal, and the arguments presented. The tribunal noted that the issue was already settled in favor of the appellant by the Bombay High Court in a previous case. The High Court's decision highlighted that the AED credit utilized by the appellant was legitimate and correctly ordered to be restored by the Commissioner. The tribunal found no merit in the impugned order and set it aside, allowing the appeal in favor of the appellant.

In conclusion, the tribunal ruled in favor of the appellant based on the precedent set by the Bombay High Court's decision in a previous case. The impugned order disallowing cenvat credit, ordering recovery of interest, and imposing a penalty was set aside, and the appeal was allowed.