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2023 (6) TMI 58 - AT - Central ExciseRecovery of credits which were excluded from the definition of inputs through Explanation 2 of Rule 2(k) of CENVAT Credit Rules, 2004 - finding of the Larger Bench of this Tribunal in Vandana Global Ltd. giving retrospective effect was given to the Notification No. 16/2009-CE(NT) - HELD THAT - As could be understood the entire dispute is based on the finding of the Larger Bench of this Tribunal in VANDANA GLOBAL LTD. VERSUS CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) by which retrospective effect was given to the Notification No. 16/2009-CE(NT) and accordingly Respondent-Department had issued periodic notices demanding recovery of credits which were excluded from the definition of inputs through Explanation 2 of Rule 2(k) of CENVAT Credit Rules, 2004. However, the said judgment of the Larger Bench had been reversed by the Hon'ble High Court of Chhattisgarh in the case of same Vandana Global Ltd., 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT and learned Counsel for the Appellant Mr. Rajesh Ostwal had rightly drawn our attention to para 5, 6 8 of the judgment that had crystallised the issue by holding that such explanation, being not in the nature of proviso, can be considered to be operative only from the date of its insertion. On going through Annexure A of the show-cause notice and found that along with the items mentioned in the explanation some other items, as pointed out by learned Counsel for the Appellant, are also figuring in the said Annexure A but it would be practically imposable at our end to compute with accuracy and reference to invoices as to if confirmed demand includes also admissible credit of Rs.1,95,91,425/- for which while agreeing with the Appellant s claim that credits in respect of all items including the items explained in Explanation 2 are admissible to the Appellant for the period from February, 2008 to 07.07.2009, non-availability of credits, as indicated in Explanation 2, to the Appellant would be effective from 07.07.2009 to June 2010, which Appellant claims to have not availed while Commissioner confirmed the entire demand including the other credits admissible to the Appellant - it is considered proper that for this limited purpose appeal could be remanded to the Original Authority. For the purpose of computation of the demand in Annexure A of the show-cause notice for the period beyond 07.07.2009 and for consideration of the issue on merit in respect of Annexure B containing list of other credits availed by the Appellant allegedly held in the Order-in-Original as completely inadmissible, re-adjudication is to be done on the basis of relied upon case laws cited by the Appellant here and to be placed before the Commissioner during the remand proceeding. Now coming to the issue in respect of other periods, it is undisputed fact that goods excluded under Explanation 2 annexed to Notification No. 16/2009-CE(NT) were not included by the Appellant as inputs for the purpose of availment of CENVAT Credits but in respect of other items namely concrete railway sleeper, other iron steel items, welding electrodes, Railway track material etc. which were supposed to be admissible credits as the same issues are no more res integra, in view of series of judgments passed in Appellant s own case in M/S. THE INDIA CEMENTS LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE 2013 (8) TMI 576 - MADRAS HIGH COURT . Appeal No. E/85078/2013 is partly allowed and CENVAT Credit availed by the Appellant for the period prior to 07.07.2009 as per Annexure A to show-cause notice is entirely admissible and CENVAT Credit in respect of items shown in Annexure B relating to items referred in Explanation 2 of Rule 2(k) are inadmissible to the Appellant - matter is remanded to the original authority to decide the issue on merit - appeal allowed by way of remand.
Issues involved:
The judgment involves a dispute regarding the retrospective effect of a notification excluding certain items from the definition of 'inputs' for availing CENVAT credit under the CENVAT Credit Rules, 2004. The Appellant, a manufacturer of Cement and Clinker, had availed CENVAT Credit on iron & steel items and capital goods used for manufacturing cement. The issue was whether the Appellant was entitled to the credit on these items and whether the retrospective application of the notification was valid. Details of the Judgment: 1. Retrospective Effect of Notification: The dispute revolved around the retrospective effect of Notification No. 16/2009-CE(NT) which excluded certain items from the definition of 'inputs'. The Larger Bench of the Tribunal had given retrospective effect to this notification, leading to demands for recovery of credits by the Department. However, the High Court of Chhattisgarh later held that such explanation could only operate from the date of its insertion, not retrospectively. The Appellant had not availed credit on excluded items post the effective date of the notification. The Tribunal found that the Commissioner had rejected the entire CENVAT Credit proposed for recovery, including other admissible credits. The matter was remanded to the Original Authority for proper computation. 2. Admissibility of Other Credits: Regarding other periods, it was established that certain items excluded under the notification were not claimed as inputs for credit. The Tribunal referred to various judgments in the Appellant's case and other precedents, affirming the admissibility of credits on iron & steel items, welding electrodes, railway track materials, and other inputs. Despite the Commissioner's findings, the Tribunal held that the Appellant was entitled to these credits based on judicial precedents. The orders passed by the Commissioner were set aside for these appeals. Conclusion: In conclusion, the Tribunal partly allowed Appeal No. E/85078/2013, finding the CENVAT Credit availed by the Appellant prior to 07.07.2009 as entirely admissible. Credits related to items excluded under the notification were deemed inadmissible. For other items, the Tribunal upheld their admissibility based on judicial precedents. Appeal Nos. E/85159/2013, E/85160/2013 & E/88159/2013 were allowed, setting aside the Commissioner's orders. The matter from a show-cause notice dated 12.04.2011 was remanded to the original authority for further consideration based on merit and legal precedents.
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