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2010 (7) TMI 180 - HC - Central ExciseCenvat Credit- Capital goods- The first respondent availed the entire credit of duty i.e., 100% on the capital goods in a sum of Rs.1,94,124/- instead of 50% of the said duty as has been provided under Rule 2(4)(a) of Cenvat Rules 2001. Such credit was taken on 25.07.2001. The assessing authority as well as the first appellate authority held that the first respondent should have taken only 50% of the duty paid in the financial year in which the capital goods were received and the balance could have been availed in any subsequent financial year on satisfaction of relevant Rule. The Tribunal however, held in the impugned order by taking note of the proviso added to Rule 2(4) of CENVAT Rules 2001, which came into effect after 01.03.2002 and by applying the provisions contained in Section 21 and 24 of General Clauses Act, 1897, the benefits which were made available after 01.03.2002 and prior to 01.04.2000 would be deemed to have been in operation during the interregnum period and therefore, the first respondent was entitled for availing 100% CENVAT credits. Held that- in question of applicability of particular provision, clear and unambiguous language of that provision to be given its true meaning. Order of Tribunal granting benefit, directly in conflict with Rule 4(2) and therefore not sustainable.
Issues Involved:
Interpretation of CENVAT Rules 2001-2002 regarding availing credit on capital goods. Detailed Analysis: 1. Question of Law and Background: The central issue in this case was whether the Hon'ble CESTAT had erred in interpreting the provisions of CENVAT Rules 2001-2002. The appellant questioned the Tribunal's decision allowing the first respondent to avail 100% CENVAT credits on capital goods, contrary to the prescribed 50% limit under Rule 2(4)(a) of CENVAT Rules 2001. The first respondent had availed full credit of duty on capital goods, transferred them to another unit, and claimed the benefit. The Tribunal relied on General Causes Act 1897 to extend the benefit to the respondent. 2. Rule Interpretation and Applicability: The Court examined Rule 4(2)(a) and (b) of CENVAT Rules 2001 to determine the entitlement of the first respondent to credit on capital goods. The rule limited credit to 50% of duty paid in the financial year of receipt, with the balance available in subsequent years. The Court emphasized that the relevant assessment year was 2001-2002, and the prevailing rule at that time mandated only 50% credit, not 100% as claimed by the respondent. 3. Legal Provisions and Precedents: The Court referred to Section 38A of the Central Excise Act, emphasizing that amendments to rules should not affect rights accrued under the previous provisions. It cited a Supreme Court decision to highlight the importance of adhering to the definitions and provisions of the Act in question. The Court concluded that the Tribunal's decision to grant excess relief beyond what was provided in Rule 4(2) of CENVAT Rules 2001 was not justifiable. 4. Decision and Ruling: Ultimately, the Court ruled in favor of the appellant, setting aside the Tribunal's order. The judgment highlighted the conflict between the Tribunal's decision and the clear provisions of Rule 4(2) of CENVAT Rules 2001. The Court concluded that the respondent was not entitled to 100% credit on capital goods as claimed. The appeal was allowed, and no costs were awarded in the matter. In summary, the High Court of Madras addressed the incorrect interpretation of CENVAT Rules 2001-2002 by the Tribunal, emphasizing the specific provisions of Rule 4(2) governing the availing of credit on capital goods. The judgment underscored the importance of adhering to statutory definitions and provisions, ultimately ruling in favor of the appellant and setting aside the Tribunal's decision.
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