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2013 (7) TMI 639 - AT - Central ExciseCenvat Credit taken twice - CENVAT on yarn was allowed only from 1.4.2003 - The assessee had used POY for manufacture of the Text. Yarn which was cleared for captive use on payment of duty (CENVAT @ 2.5/- per kg AED (TTA) @ 15% of CENVAT), therefore CENVAT credit was admissible for the duty paid Text. Yarn contained in the finish product - The assessee took double Cenvat credit, they took Cenvat Credit on duty paid Text. Yarn laying in the stock and also for the duty paid POY used in the manufacture of this duty paid Text. Yarn Held that - Notification No. 25/2003-CE dated 25.3.2003 intended to grant Cenvat credit in respect of inputs lying in stock as on 31.3.2003 but the goods claimed to be input by the appellant in the present appeal was not the input as on 31.3.2003 because that was already transformed into finished goods by ultimate consumption before 1.4.2003 - Consumption of input the appellant has already availed Cenvat credit on input. After notification No. 25/2003-CE dated 25.3.2003 the appellant again made attempt to avail Cenvat credit on yarn which was already transformed into finished goods. Therefore, there was no input existed as such to entitle the appellant to avail Cenvat credit further after 31.3.2003 Decided against the Assessee.
Issues: Allegation of double CENVAT credit taken by the assessee, Interpretation of Rule 9A of Cenvat Credit Rules, 2002, Recovery of excess CENVAT credit under Rule 12
Allegation of double CENVAT credit taken by the assessee: The case revolved around the allegation that the assessee had taken double CENVAT credit on a specific quantity of material, including Grey Twisted W.I.P., Grey Twisted Finish Stock, Dyeing W.I.P., Dyeing Finish Stock, and yarn waste. The Revenue contended that the assessee had taken credit twice on the material, first on the POY contained within Grey Texturised Yarn and Grey Texturised Yarn itself, and secondly on the duty paid Grey Texturised Yarn cleared for captive consumption. The total excess CENVAT credit amounted to Rs. 3,45,199 during April 2003. The Revenue argued that the assessee contravened the provisions of Rule 9A of the Cenvat Credit Rules, 2002, by taking excess credit. Interpretation of Rule 9A of Cenvat Credit Rules, 2002: The Revenue contended that as per Rule 9A of the Cenvat Credit Rules, 2002, the assessee was only entitled to take credit on the input content in the goods lying in stock or goods in process. They argued that the assessee could only take credit for the Grey Texturised Yarn on the POY, its input, and for the Grey Twisted Yarn on its input, i.e., Grey Texturised Yarn. Furthermore, the Rule did not provide for credit on yarn waste, which the assessee had claimed. The Revenue emphasized that the excess CENVAT credit was liable to be recovered from the assessee under Rule 12 of the Cenvat Credit Rules, 2002. Recovery of excess CENVAT credit under Rule 12: The Departmental Representative argued that the notification No. 25/2003-CE dated 25.3.2003 aimed to grant CENVAT credit for inputs lying in stock as of 31.3.2003. However, the goods claimed to be input by the appellant were not considered input as of 31.3.2003 since they had already been transformed into finished goods through ultimate consumption before 1.4.2003. The contention was that once the yarn was consumed before 1.4.2003, it was not considered to be lying in stock as of 31.3.2003, rendering the appellant ineligible to claim CENVAT credit. The appellate authority and the lower authorities had correctly rejected the claim of the appellant based on these grounds, leading to the dismissal of the appeal. In conclusion, the judgment upheld the decision of the lower authorities, dismissing the appeal on the grounds that the assessee had taken double CENVAT credit, contravening Rule 9A of the Cenvat Credit Rules, 2002, and was liable for the recovery of the excess credit under Rule 12. The interpretation of the rules and the specific circumstances of the case were crucial in determining the ineligibility of the appellant to claim CENVAT credit for the goods in question.
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