2019 (4) TMI 1457 - AT - Central Excise

Utilisation of CENVAT Credit on AED - Since tyres manufactured with dipped nylon tyre cord fabric did not attract AED, cenvat credit on AED paid could not be utilised till 1.4.2000 by the appellant - Credit of Additional Excise Duty (AED) utilised for payment of Basic duty of Excise - HELD THAT - The issue decided in the case of COMMISSIONER OF C. EX., MUMBAI-III VERSUS CEAT LTD. 2010 (3) TMI 621 - CESTAT, MUMBAI , where it was held that In the instant case, the debits were held to be of no consequence when the assessee was required to pay duty initially discharged using AED(GSI) credit. Therefore, the credit needed to be restored and was correctly ordered so by the Commissioner. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Central Excise Duty demand confirmation against the appellant along with interest and penalty under Cenvat Credit Rules, 2004.
- Utilization of accumulated AED credit for payment of BED.
- Amendment in Cenvat Credit Rules, 2002 and retrospective effect on AED credit utilization.
- Show cause notice alleging wrong availment and utilization of cenvat credit.
- Interpretation of statutory provisions and relevant case laws.

Analysis:
1. Central Excise Duty demand and penalty: The appeal was filed against the Order-in-Original confirming Central Excise Duty demand and penalty on the appellant. The Commissioner imposed a significant penalty under Section 11AC of the Central Excise Act. The appellant challenged this demand along with interest under Rule 14 of the Cenvat Credit Rules, 2004.

2. Utilization of accumulated AED credit: The appellant had accumulated AED credit prior to April 1, 2000, which was utilized for payment of BED after the amendment in 2003. However, subsequent amendments restricted the utilization of AED credit for certain purposes. The issue revolved around the utilization of this credit and the retrospective effect of statutory changes on such utilization.

3. Show cause notice and wrong availment of credit: A show cause notice was issued to the appellant alleging the incorrect availment and utilization of cenvat credit. The notice claimed that the appellant wrongly utilized the credit for payment of AED on specific products, leading to recoverable duty amounts. The proceedings under this notice resulted in the impugned order.

4. Interpretation of statutory provisions and case laws: The Tribunal analyzed similar issues in the case of Commissioner of C.Ex. Vs. Ceat Limited and upheld the adjudication order in favor of the assessee. The Tribunal emphasized the statutory changes, clarifications, and the legitimate earning of credit by the appellant. The decisions of the Tribunal were affirmed by the Hon'ble Bombay High Court and Hon'ble Kerala High Court, providing substantial legal support to the appellant's case.

5. Final decision: Based on the precedents and interpretations of relevant laws, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The decision provided consequential relief to the appellant based on the legal analysis and case laws cited during the proceedings.