2019 (10) TMI 222 - HC - Central Excise

Utilization of accumulated CENVAT / MODVAT credit - Money credit Scheme - nexus/connection with the final product - whether the credit can be availed by the petitioner through an unconnected final product? - Utilization of balance of credit in the absence of N/N. 45/89-CE dated 11.10.1989 - HELD THAT - This court on consideration of the notification dated 11th October, 1989 had ruled that Cenvat credit could be utilised in any unit of the same manufacturer. It did not lay down any ratio that the two final products could be different. It only said that manufacture could take place in different units of the same manufacture. The respondents should consider the request of the appellants made by the letter dated 18th October, 2016 read with the departmental reply dated 11th November, 2016 in a proper proceeding constituted by the respondents, attended by the appellants and the departmental representatives, hearing them, taking into account various decisions and the observations made, within 4 months of communication of this order. Appeal disposed off.

Summary

Issues:
Interpretation of Cenvat credit rules and Notification 45/89-CE for utilisation of accumulated credit against excise duty on different final products.

Analysis:
The appellant company sought approval to use accumulated money credit under the Money credit Scheme against excise duty on different excisable goods. The Assistant Commissioner cited the prohibition under erstwhile rule 57K-57P and Notification 45/89-CE against utilizing credit for final products other than intended. The dispute arose regarding the entitlement of appellants to use unutilized Cenvat credit for manufacturing final products different from the intended ones. The appellants, aggrieved by a previous judgment, cited the Supreme Court's judgment in Collector of Central Excise, Pune Vs. Dai Ichi Karkaria Ltd., emphasizing the indefeasibility of credit once validly taken. The respondents argued against this, highlighting the restrictions in Notification 45/89-CE on credit utilization for specific final products.

The appellants referenced a previous judgment related to the same notification, emphasizing the permissibility of credit utilization in different units of the same manufacturer, not necessarily for the same final products. The court noted the Supreme Court's decision on Cenvat credit utilization for any final product of the same manufacturer but highlighted that it did not address the specific notification in question. Consequently, the court directed the respondents to consider the appellants' request in a proper proceeding, taking into account relevant decisions and issuing a reasoned order within a specified timeline, keeping all points open for further examination. The appeal was disposed of by setting aside the previous order, allowing for a more comprehensive review of the matter.