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2010 (9) TMI 136 - HC - Central ExciseCenvat Credit invoices to the appellants showing the element of BED paid on inputs and not showing any element of AED as no AED was leviable on final products for the purpose of taking Cenvat credit - No credit of AED taken and utilized by the appellants - because credit of AED paid on an input could be utilized towards payment of AED only leviable on a final product - amendment was made in Cenvat Credit Rules 2002 that credit of AED paid on input can be utilized towards payment of BED and special excise duty as well leviable on a final product. Further by a Circular dated 06.03.2003 it was also clarified that any credit of AED accruing prior to 01.03.2003 to a manufacturer could also be utilized towards payment of BED and SED as well on final product (Clause 78 of Finance (No.2) Bill 2004) - appellants claimed Cenvat credit of AED (GSI) Held that - duty of excise or service tax due on the input or input service has been paid and such input or input service has actually been used or is to be used in the manufacturing of final products or in providing output services - matter is remanded back to the Joint Commissioner who shall scrutinize the documents furnished by the appellants and satisfy himself and record the satisfaction if any in term of Sub-Rule(2) of Rule 9 of the Cenvat Credit Rules 2004 and if the requirements laid down therein are satisfied the AED (GSI) shall be allowed to the appellants Appeal is dismissed accordingly.
Issues:
Admissibility of Cenvat credit of Additional Excise Duty (GSI) paid on sugar during a specific period irrespective of duty payment shown on invoices issued by first stage dealers. Analysis: The case revolved around the admissibility of Cenvat credit of Additional Excise Duty (GSI) paid on sugar during the period of 01.04.2000 to 09.10.2000. The appellants, manufacturers of aerated water and beverage syrup, purchased sugar from first stage dealers who did not show the element of AED on invoices as it was not required before 01.03.2003. The dispute arose when a show cause notice was issued proposing to withdraw the Cenvat credit claimed by the appellants. The Order-in-Original confirmed the demand of duty and imposed a penalty, which was upheld by the CIT(A) and the Tribunal. The Tribunal noted that the AED accrued prior to 01.03.2003 could be utilized for Cenvat credit payment. However, the duty paying documents, i.e., the dealer's invoices, did not mention the payment of AED, leading to the disallowance of credit. The Tribunal upheld the demand of duty and interest but set aside the penalty due to no intent to evade payment. The appellants argued that Rule 9 of the Cenvat Credit Rules, 2004, relied upon by the Tribunal, was not applicable as it came into effect in 2004, while the relevant period was 2000-2000. They contended that the burden of AED was passed on to them, as evidenced by invoices. The High Court found that the AED on sugar had been paid, and the burden was passed on to the appellants, supported by evidence in the invoices. The rejection of Cenvat credit based on non-compliance with Rules that did not exist at the relevant time was deemed incorrect. The Court emphasized that the denial of credit should not be solely based on procedural grounds if the duty payment details were present in the documents. The matter was remanded to the Joint Commissioner to scrutinize the documents and allow the AED (GSI) to the appellants if the requirements were met, in line with Rule 9 of the Cenvat Credit Rules, 2004. In conclusion, the High Court dismissed the appeal, setting aside the Tribunal's order and remanding the matter for further review to ensure the appellants' entitlement to Cenvat credit of AED (GSI) paid on sugar during the specified period.
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