2009 (8) TMI 488 - AT - Central Excise

Cenvat Credit- whether the appellants are required to reverse the Cenvat credit of Additional Duty of Customs (CVD) on the imported defective nylon tyre cord fabric imported by them and cleared by them after subjecting them to some processes ? In the light of the decision of CCE, Vadodara v. Narmada Chematur Pharmaceuticals Ltd., 2005 (179) E.L.T. 276 (S.C.), whereas held that, where the consequence is revenue neutral, demand for wrong availment of credit quashed by the Tribunal was correct, held that- since the issue is covered by the decision cited by the learned advocate, we find that the appeal itself can be disposed of. Accordingly, we allow the stay petition and allow also the appeal with consequential relief to the appellants.

Summary

Issues involved:
Whether the appellants are required to reverse the Cenvat credit of Additional Duty of Customs (CVD) on imported defective nylon tyre cord fabric cleared after processing.

Analysis:

The issue in this appeal before the Appellate Tribunal CESTAT, MUMBAI, revolves around the requirement for the appellants to reverse the Cenvat credit of Additional Duty of Customs (CVD) on the defective nylon tyre cord fabric imported by them and cleared after undergoing certain processes. The contention is that the activities undertaken do not amount to manufacturing, thus challenging their entitlement to Cenvat Credit under Rule 16 of the Central Excise Rules. The appellant's advocate argues that previous Tribunal decisions in similar cases have established that if duty paid on cleared goods exceeds the Cenvat credit availed, it effectively results in the reversal of Cenvat credit. Additionally, reference is made to a Supreme Court ruling in the case of CCE, Vadodara v. Narmada Chematur Pharmaceuticals Ltd., which supports the position that when the consequence is revenue neutral, a demand for wrong credit availed can be quashed. Based on these arguments and precedents, the Tribunal finds the issue to be covered by the cited decision, leading to the disposal of the appeal in favor of the appellants.

The Tribunal, comprising Justice R.M.S. Khandeparkar, President, and Shri B.S.V. Murthy, Member (T), acknowledges the submissions made by Shri Sanjay Grover, Advocate for the Appellant, and Shri K.P. Singh, DR for the Respondent. The order is delivered by B.S.V. Murthy, Member (T) orally. The Tribunal's decision to allow the stay petition and the appeal with consequential relief to the appellants is based on the established legal principles and precedents cited during the proceedings. The judgment emphasizes the importance of consistency in legal interpretations and application of rules, as evidenced by previous Tribunal decisions and the Supreme Court ruling referenced in the arguments presented before the Tribunal. By aligning the current case with the legal precedents and principles highlighted during the hearing, the Tribunal concludes that the appeal can be resolved in favor of the appellants, thereby granting them the relief sought in the matter concerning the reversal of Cenvat credit on the imported defective nylon tyre cord fabric cleared after processing.