2013 (11) TMI 1223 - AT - Central Excise

Admissibility of Deemed credit - Cash Refund on accumulated cenvat credit under Rule 5 of Cenvat credit Rules - Clearances made for home consumption where aseessee did not utilize the credit and paid duty - Whether the deemed credit would be admissible in respect of grey fabrics purchased from the market and subjected to processing Held that - Deemed credit would be admissible in respect of grey fabrics received by a processors for manufacture of processed fabrics cleared on payment of duty for export under bond. The Audit party of C & AG had raised an objection that since the grey cotton or manmade fabrics are not declared in the respective notification, the deemed credit would not be admissible - The objection had not been accepted by the department on the ground that in terms of the provisions of Cenvat Credit Rules, deemed credit would be admissible to the manufacturer of final products even if the declared inputs were not used directly by such manufacturer - the Government itself has now accepted the position that deemed credit would be available in respect of grey cotton /man made fabrics received by the processor for processing for export under bond or for clearance for home consumption There was no infirmity in the order Decided against Revenue.

Issues:
1. Admissibility of deemed credit on grey fabrics procured and processed for export under bond.
2. Interpretation of notifications related to deemed cenvat credit under Rule 5 of the Cenvat Credit Rules.
3. Review of refund claims allowed by Asstt. Commissioner and Commissioner (Appeals).
4. Applicability of Tribunal's previous judgments on similar issues.

Issue 1: Admissibility of deemed credit on grey fabrics for export under bond
The judgment revolves around the admissibility of deemed credit on grey fabrics procured and processed for export under bond. The respondent procured grey fabrics and availed deemed credit under notification no.6/2002-CE (NT) for the period from April 2001 to June 2002. The Revenue contended that since grey fabrics were fully exempt from duty during the period, deemed credit was not available. However, the Tribunal's previous judgment held that deemed credit is admissible for grey fabrics used in manufacturing processed fabrics cleared on payment of duty for export under bond. The Tribunal cited various cases supporting this view, concluding that the impugned order was correct and dismissed the Revenue's appeals.

Issue 2: Interpretation of notifications related to deemed cenvat credit
The dispute also involved the interpretation of notifications related to deemed cenvat credit under Rule 5 of the Cenvat Credit Rules. The Departmental Representative argued that grey fabrics were not specifically mentioned in the notifications and that the deemed credit was not applicable when goods were fully exempt from duty. In contrast, the respondent's counsel cited Tribunal decisions and the Addl. Commissioner's order in the respondent's case, which allowed deemed credit for grey fabrics brought in for processing. The Tribunal upheld the impugned order based on previous decisions and the government's acceptance of deemed credit for grey fabrics, dismissing the Revenue's appeals.

Issue 3: Review of refund claims allowed by Asstt. Commissioner and Commissioner (Appeals)
The judgment also addressed the review of refund claims allowed by the Asstt. Commissioner and subsequent rejection by the Commissioner (Appeals). The Commissioner's order-in-appeal dated 14.12.2005 rejected the review appeals filed by the Revenue against the refund claims. The Tribunal considered the arguments from both sides and upheld the impugned order, emphasizing the applicability of previous Tribunal decisions in similar cases.

Issue 4: Applicability of Tribunal's previous judgments on similar issues
The Tribunal extensively referenced its previous judgments and decisions in similar cases to support its ruling on the admissibility of deemed credit for grey fabrics processed for export under bond. The Tribunal highlighted various cases where deemed credit was allowed for grey fabrics used in manufacturing processed fabrics, reinforcing the consistency of its decisions on this matter. Additionally, the Tribunal noted the government's acceptance of deemed credit for grey fabrics in a separate case, further strengthening the position that deemed credit was available for such fabrics. Ultimately, the Tribunal dismissed the Revenue's appeals based on the established legal precedents and interpretations.

This comprehensive analysis of the judgment provides a detailed overview of the issues involved and the Tribunal's reasoning behind its decision, incorporating legal terminology and significant phrases from the original text.

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