2010 (3) TMI 540 - HC - Central Excise

Refund of Credit - respondent-assessee had accumulated deemed credit for which refund claim had been filed and the same was rejected by the adjudicating authority. Respondent-assessee therefore claimed that accumulated amount of deemed credit existing In the book of account did not lapse on account of introduction of Compounded Levy Scheme in 1998 only because assessee could not utilize the said accumulated credit as per terms of the Compounded Levy Scheme. Held that - impugned Tribunal order holding accumulated credit shall not lapse when provision therefore absent sustainable.

Summary

Issues:
1. Whether the Tribunal was justified in rejecting the appeal of revenue regarding the lapse of accumulated credit in the absence of specific legal provisions?
2. Whether Government Notifications and Circulars can be considered as legal provisions relating to the issue of accumulated credit lapse?

Analysis:
1. The respondent-assessee had accumulated deemed credit for which a refund claim was rejected by the adjudicating authority. The assessee argued that the accumulated credit did not lapse due to the introduction of the Compounded Levy Scheme in 1998, even though it could not be utilized as per the scheme's terms. The adjudicating authority maintained that since the order rejecting the refund claim was unchallenged, the credit lapsed. The Tribunal, however, found that there was no statutory provision indicating that the credit had lapsed, and in the absence of such provision, the accumulated credit shall not lapse.

2. The revenue contended that the Compounded Levy Scheme did not permit carrying forward unutilized accumulated credit, implying that it had lapsed. The Tribunal, while upholding the Commissioner (Appeals) order, noted that the revenue failed to demonstrate any statutory provision showing that the deemed credit had lapsed. The Tribunal emphasized that without a legal provision explicitly stating the lapse of credit in the books, the accumulated credit shall not lapse.

3. The appellant revenue could not establish any legal provision through Acts, Rules, Notifications, or Circulars indicating that the unutilized credit in the books should lapse due to the introduction of the Compounded Levy Scheme. As a result, the High Court found no legal infirmity in the Tribunal's decision and concluded that no substantial question of law arose from the order. Consequently, the appeal was dismissed.

This detailed analysis of the judgment highlights the key issues of whether specific legal provisions were necessary for the lapse of accumulated credit and the relevance of Government Notifications and Circulars as legal provisions in such cases.