2017 (6) TMI 619 - AT - Central Excise

Whether the unutilized CENVAT Credit legally earned by the respondent in their distillery division can be allowed for payment of Central Excise duty on Sugar? Held that - reliance placed in the case of CCE, Patna Vs. New Swadeshi Sugar Mills 2015 (9) TMI 881 - SUPREME COURT , where it was held that CENVAT Credit which was already earned by the assessee, could not have been taken away if the rigors of Rule 6 would be having only prospective effect - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether unutilized CENVAT Credit earned by the respondent can be used for payment of Central Excise duty on Sugar.

Analysis:
The appeal was filed by the Revenue against the Order-in-Original passed by the Commr. of Central Excise & Service Tax, Patna. The respondent was engaged in the manufacture of various products including Sugar, and the main issue revolved around the eligibility of utilizing unutilized CENVAT Credit for payment of Central Excise duty on Sugar. The Commr. of Central Excise & Service Tax, Patna, allowed the respondent to use the unutilized CENVAT Credit, citing Rule 3 (4) of the Cenvat Credit Rules, 2004. The Revenue challenged this decision through the appeal.

The Adjudicating Authority highlighted that there was no legal basis for denying the use of CENVAT Credit for payment of duty on Sugar. Referring to Rule 3 (4) of the Cenvat Credit Rules, 2004, it was established that legally earned CENVAT Credit can be utilized for payment of any Excise duty on final products, including Sugar. The Authority emphasized that since Sugar was a final product of the assessee, there was no justification for restricting the use of unutilized CENVAT Credit. The decision was supported by various precedents cited by the assessee.

During the hearing, the Revenue pointed out that two decisions of the Tribunal, relied upon by the Commissioner, were not accepted by the Department, leading to appeals being filed. However, it was noted that these decisions were upheld by the Hon'ble Supreme Court. The respondent, on the other hand, relied on several decisions supporting their stance on the issue.

In a significant reference to a case involving New Swadeshi Sugar Mills, the Hon'ble Supreme Court emphasized the importance of CENVAT Credit to manufacturers, stating that once validly taken, the credit is indefeasible and can be used for payment of excise duty on final products without limitation in time. The Court highlighted the significance of CENVAT credit under the scheme, equating it to tax paid.

Ultimately, after considering all arguments and legal precedents, the Tribunal found no reason to interfere with the order of the Commissioner, leading to the dismissal of the appeal filed by the Revenue. The decision was based on the interpretation of relevant rules and established principles regarding the utilization of CENVAT Credit for payment of Central Excise duty on final products like Sugar.