2009 (8) TMI 610 - AT - Central Excise

Rebate- A show cause notice was issued to the respondent by the Ld. Commissioner of Central Excise Delhi-I proposing demands under Rule 11(3) (ii) read with Rule 6 of the Cenvat Credit Rules 2004 for availing inadmissible credit. Similar show cause notice was issued for subsequent period also. These show cause notices are pending for adjudication. It is alleged that the respondent is become liable to pay back the Cenvat credit equivalent to the duty paid on all the inputs which were either lying in stock or in the form of work in progress or contained in the exempted finished products lying in stock on 1-3-2008 and the balance was to be lapsed. It was further alleged that the respondent was not entitled to take any further credit and required the respondent to pay up the entire Cenvat credit availed by it between March 2008 and July 2008 on receipt of duty paid goods irrespective of the fact that the exempted goods manufactured were exported by the respondent. Held that- Moreover as per Rule 6(1) and Rule 11(3)(ii) also takes into account in a situation where the inputs are meant for use exclusively in manufacture of such final product which become exempted and do not envisage a special situation like in the instant case where the common duty paid inputs are received for manufacture of both dutiable as well as exempted goods for export. The provisions of Rule 6(6)(v) are the specific rules which covers the situation as in the instant case and thus the Cenvat credit of duty paid on dutiable was correctly held as admissible by the Ld. Commissioner (Appeals). In these terms I do not find any merit in the appeal and the same is dismissed. Stay application is also disposed off accordingly.

Summary

Issues Involved:
1. Admissibility of Cenvat Credit for inputs used in both exempted and dutiable final products.
2. Rejection of rebate claims under Rule 18 of the Central Excise Rules, 2002.
3. Jurisdiction of the Assistant Commissioner in denying rebate claims.

Detailed Analysis:

1. Admissibility of Cenvat Credit for Inputs Used in Both Exempted and Dutiable Final Products:
The central issue revolves around the respondent, a manufacturer/exporter, using duty-paid inputs for manufacturing both exempted (Menthol Crystal BP/USP) and dutiable (flavouring material) final products. Post 1-3-2008, Menthol Crystal and Menthol BP/USP were exempted from duty under Notification No. 4/08-C.E. Consequently, the revenue argued that under Rule 11(3)(ii) read with Rule 6 of the Cenvat Credit Rules, 2004, the Cenvat credit lying with the manufacturer should lapse and not be allowed for payment of duty on any other final product. The respondent contended that the provisions of Rule 6(6)(v) of the Cenvat Credit Rules, 2004, which exempt the application of sub-rules (1), (2), (3), and (4) when goods are cleared for export under bond, were applicable.

2. Rejection of Rebate Claims Under Rule 18 of the Central Excise Rules, 2002:
The Maritime Commissioner issued show cause notices proposing to deny rebate claims, arguing that the Cenvat Credit utilized by the respondent was inadmissible. The Commissioner rejected the rebate claims on the grounds that the respondent failed to prove the correctness and validity of the Cenvat Credit availed and utilized, and the triplicate copy of ARE-1 was not made available. The Commissioner further stated that the duty payment on exported goods was made using disputed credit, making the rebate claims inadmissible under Rule 18 of the Central Excise Rules, 2002, read with Notification No. 19/2004-C.E. (N.T.) and Notification No. 20/2004-C.E. (N.T.).

3. Jurisdiction of the Assistant Commissioner in Denying Rebate Claims:
The Assistant Commissioner endorsed the EP copy of the Shipping Bill to deny the rebate claim, citing the pending show cause notice and the order-in-original. The Commissioner (Appeals) set aside this order, stating that there was no impediment in permitting export under the shipping bill, as the credit utilized did not appear to be inadmissible. The Revenue appealed, arguing that the rebate claim should be denied as the Cenvat credit itself was not authenticated by the Central Excise Officer, which is mandatory for refund claims.

Conclusion:
The Tribunal found that the provisions of Rule 6(6)(v) of the Cenvat Credit Rules, 2004, were applicable, which exempt the application of sub-rules (1), (2), (3), and (4) when goods are cleared for export under bond. The Tribunal also noted that Rule 11(3)(ii) is a transitional provision and does not override the benefits conferred by Rule 6(6)(v). The Tribunal upheld the Commissioner (Appeals) decision, stating that the Cenvat credit of duty paid on dutiable goods was correctly held as admissible. The appeal by the Revenue was dismissed, and the stay application was disposed of accordingly.

(Pronounced in Court on 12-8-2009)