2019 (8) TMI 201 - AT - Central Excise

Utilization of accumulated credit - lapse of accumulated credit - case of the department is that the appellant was issued show cause notice for the period December 2007 to March 2011, proposing elapsing credit of ₹ 2,86,83,157/- - HELD THAT - There is no dispute that present demand is out of accumulated credit balance as on 01.03.2007 for which the proceedings were initiated by issuing show cause notice dated 03.04.2012. The Tribunal vide order No. A/10640-10642/2019 dated 04.04.2019 held that the accumulated credit of ₹ 2,86,83,157/- was not lapsed by interpreting Rule 11 (3)(i) of Cenvat Credit Rules, 2004. Since the proposal of elapsing accumulated credit itself has been set aside, the utilization for the credit out of such accumulated credit cannot be questioned. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegation of wrong utilization of credit.
2. Interpretation of Rule 11(3)(i) of Cenvat Credit Rules, 2004.
3. Applicability of previous judgments in similar cases.
4. Sustainability of the demand based on accumulated credit balance.

Analysis:

1. The appellant, engaged in manufacturing Polyester Texturised Yarn, availed Cenvat credit of inputs and capital goods. They shifted between two notifications for availing benefits, leading to a dispute regarding the utilization of credit. The department issued a show cause notice proposing to lapse a certain credit balance, which the appellant contested, citing a previous Tribunal order in their favor.

2. The Tribunal analyzed Rule 11(3)(i) of the Cenvat Credit Rules, 2004, and previous judgments like Wearit Global Limited, Janson Textile Processors, and Sitaram India Limited. It concluded that the appellant followed the conditions under Rule 11(3)(i), which required payment equivalent to the Cenvat credit in stock for opting a specific notification. As the conditions were met, the balance credit was not liable to be reversed, aligning with the rulings in similar cases.

3. Citing the previous judgments, the Tribunal emphasized that the manufacturer's actions were in line with the law, allowing credit utilization for clearance of finished goods or capital goods. The Tribunal granted relief to the appellant based on the consistent application of legal principles in similar cases, highlighting the uniformity in decisions across different instances.

4. The Tribunal, considering the earlier order setting aside the proposal to lapse accumulated credit, deemed the utilization of credit from such balance as legitimate. Consequently, the impugned order questioning the credit utilization was overturned, and the appeal was allowed in favor of the appellant. The judgment emphasized adherence to legal provisions and precedent to resolve the dispute regarding the sustainability of the demand based on the accumulated credit balance.