1996 (4) TMI 234 - AT - Central Excise

Issues:
1. Interpretation of Notifications 27/87 and 45/89 regarding the utilization of accumulated credit for payment of duty.
2. Whether the appellants violated the provisions of the exemption notification by exceeding the prescribed limit of Rs. one thousand PMT for credit utilization.
3. Applicability of High Court judgments on the utilization of accumulated credit under rescinded notifications.
4. Analysis of the rebate scheme and restrictions on credit utilization for excise duty payments.

Issue 1: Interpretation of Notifications 27/87 and 45/89
The appellants, engaged in manufacturing vegetable products, availed the cash credit scheme under Notification 27/87 for using minor specified oil in their final product. The notification imposed a condition that the credit utilized for duty payment on an individual clearance shall not exceed Rs. one thousand PMT. Subsequently, Notification 27/87 was rescinded, and Notification 45/89 was issued on similar lines. The department initially disallowed credit utilization post-rescindment, but High Courts' judgments allowed it. The Commissioner (Appeals) held that credit utilization was subject to the provisions of Central Excise Rules and restricted to Rs. one thousand PMT per clearance under both notifications.

Issue 2: Violation of Exemption Notification
The department issued show cause notices alleging that the appellants exceeded the Rs. one thousand PMT limit by utilizing credit earned under both notifications for duty payments exceeding the prescribed amount. The Assistant Commissioner confirmed the demand, which was appealed before the Commissioner (Appeals). The Commissioner upheld the demand, citing the Gujarat High Court's decision and the Delhi High Court's modification, directing that credit utilization should not exceed Rs. one thousand PMT.

Issue 3: Applicability of High Court Judgments
The appellants argued that High Court decisions allowed the utilization of accumulated credit even after rescinding Notification 27/87. They contended that both notifications were independent, and they correctly utilized the credit for duty payments. The High Courts' judgments indicated that the appellants were entitled to utilize credit under both notifications simultaneously for individual clearances.

Issue 4: Rebate Scheme and Credit Utilization Restrictions
The Tribunal considered the High Courts' judgments from Gujarat, Madras, and Andhra Pradesh, emphasizing that rescinding Notification 27/87 did not bar utilizing the accumulated credit earned while the notification was in force. The scheme aimed to encourage the use of minor oils in manufacturing, limiting credit utilization to Rs. one thousand PMT per clearance. The Tribunal rejected the appellants' contention that simultaneous utilization of credit under both notifications for clearances exceeding Rs. one thousand PMT should be allowed, emphasizing that the notifications provided for a rebate of duty with no subsidy element, and credit utilization should adhere to the prescribed limits.

In conclusion, the Tribunal rejected the appeals, affirming the Commissioner (Appeals)'s orders, and upheld the restrictions on credit utilization as per the notifications and High Courts' interpretations.

← Previous Next →