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TMI Blog2012 (5) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... redit procedure. 2. The appellant received furnace oil during the period April, 05 to March, 09. However, on account of inadvertent mistake, they did not avail credit on duty paid furnace oil amounting to Rs.45,72,156/-. As such, the credit of duty paid on furnace oil which was otherwise available to them, was required to be utilized for payment of duty in respect their final clearance. The balance duty was required to be paid in cash. 3. As the appellant did not take the credit of duty paid on furnace oil, the said credit could not be utilized by them, thus resulting in payment of duty to the extent of Rs.41,71,424/- by cash, through PLA. The said duty so paid by them was subsequently refunded to them. 4. It is seen that the appellant subsequently took modvat credit on 14.8.09 thereafter the said credit was utilized by them for payment of duty on their final product cleared and balance was paid through PLA. As such, less duty was paid through PLA in August, 2009, thus resulting in less refund of duty paid in cash. 5. The proceedings were initiated against the appellant by way of issuance of show cause notice dt.28.10.10. The notice proposed the denial of credit of Rs.45,72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there is no revenue loss and the entire exercise is Revenue neutral. At this stage, reference is made to the Tribunal's decision in the case of CCE, Jammu vs. New India Wire Cables-2008 (232) ELT 681 (Tri.-Del.). In the said decision, the duty was paid in cash without first exhausting availed credit. By taking note of the fact that such credit was utilized in the subsequent period, thus reducing the quantum of cash payment. The Tribunal observed that the entire situation is revenue neutral. It was also noted by the Tribunal that interpretation which defeat the purpose of the notification should be avoided. In the present case, we find that the credit was not availed by the appellant at all and question of utilization does not arise, whereas in the Tribunal's decision referred supra, the credit was availed and was lying unutilised. Inspite of that the Tribunal observed that the entire situation is revenue neutral. Applying the ratio of the above decision, we are of the view that the applicant has been able to make out a good case in their favour so as to allow the stay petition unconditionally. 8. Apart from above, we find that the demand stands confirmed against the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first. However from 01-04-08 there are express provisions as may be seen from extracts below demonstrating the scope of the exemption and the method by which the scope is administered. Extracts from Notification 56/2002-CE as was in force from 01-04-2008 "In exercise of the powers conferred by............. hereby exempts the goods.......... cleared from' a unit located in......, from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts as is equivalent to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit " "2A In cases where all the goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall be subject to the condition that the manufacturer first utilizes whole of the CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash." 13. It is also to be noted that Cenvat credit of duties paid on inputs is not intended to be refunded in cash, except in a situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notification also enjoins that the manufacturer should first exhaust Cenvat credit available. 17. In my opinion the order recorded by Member (Judicial) has the effect of negating the above express provisions of law which the Tribunal is expected not to do. The decision of Tribunal in the case of CCE Jammu Vs. New India Wires and Cables (supra) relied upon by Member (Judicial) is for the period prior to 01-04-2008 when the provisions in the notification was amended. So in my opinion the decision by Member (Judicial) has the effect that once a law is proclaimed by Tribunal it will continue not withstanding any change in enacted law. 18. So in my view pre-deposit should be called for at least in respect of excess exemption availed for the period after 01-04-08. 19. POINT OF DIFFERENCE OF OPINION Whether the pre-deposit is to be waived on the basis of revenue neutrality assessed by Member (Judicial) or pre-deposit should be called for considering that express provisions of notification as in force after 01-04-08 has been violated as assessed by Member (Technical) (Pronounced on....................) (Archana Wadhwa) Member (J) (Mathew John) Member (T) 20. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification and to the extent not so set off was required to be discharged through PLA and the duty so deposited was only permitted to be refunded. 24. On the above premise, at the prima facie stage, it was viewed by the learned Judicial Member in Para 6 of the order that there was Revenue neutrality and the decision of the Tribunal in the case of CCE, Jammu vs. New India Wire and Cable - 2008 (232) ELT 681 (Trib. Delhi) applies to order waive pre-deposit. So also it was noticed that extended period of limitation was invoked by show cause notice dated 28.10.2010. 25. Aforesaid proposition of learned judicial Member was not agreeable to learned Technical Member. He opined that the appellant was a manufacturer having manufacturing facility at various locations in India for which it was very puzzling how the appellant forgot to take credit on furnace oil used in Jammu alone. Narrating different circumstances in Para 13 of the order, it was viewed by him that there was no decision available to held that the assessee can adopt its own practice contravening express provisions of law to plead revenue neutrality. In Para 16 of the order it was stated that the wordings of the notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11A of the Act along with interest under Section 11AB of the Act". [Emphasis supplied] 28. It was also submission of ld. DR that there was no dispute that finished goods manufactured by the appellant were dutiable. In terms of the notification, extent of duty paid in cash through PLA by appellant on such goods was only refundable since mandate of notification was that Modvat credit was necessarily required to be first set off against duty liability in respect of the finished goods. According to the notification if quantum of modvat credit available was only insufficient, the deficient amount was to be discharged through PLA to get refund of that amount only because input credit was not at all intended to be refunded by the Notification. According to him any other construction of the notification shall unduly enrich an assessee at the cost of Revenue. The appellant did not utilise Modvat credit available to it during the period of April 2005 to March, 2009. But making deposits through PLA, entire amount was taken back as refund. It chose to enjoy the accumulated Modvat credit after tax holiday period to the detriment of justice. It is an admitted fact that the appellant col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribes a particular mode to be followed, only that mode is to be followed without deviation thereto in order to reap the benefit of the grant and any interpretation defeating the object of the notification results in denial of the grant. Extending the exemption (refund) to the extent of duty permissible to be set off by modvat account is opposed to public policy since exemption to the extent of input credit available for set off was not intended to be refunded by law. Utilisation of modvat account meets immediate scrutiny and no right to defer such scrutiny is choice of assessee. Failure to exercise right to set off of Modvat credit duly during tax holiday period extinguishes such right in absence of any authority under law to carry forward unutilised Modvat credit to a future date for set off. 32. The notification in question having limited the exemption (refund) to duty paid only on incremental value of output through PLA, exemption (refund) of duty on input component contained in finished goods is not permitted. Claim of Modvat credit during material period being mandate of law, failure to seek set off thereof duly, debars exemption (refund) and right to claim that at a fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less for non-fulfilment of statutory obligation. 35. In view of the above discussion it would be rational to say that the conclusion of the ld. Technical Member in para 18 of the order appears to be quite reasonable and is within the sanction of the law. Pre-deposit is therefore to be called for to the extent indicated in that para so that in compliance to the direction of pre-deposit, the appellant shall have right to contest its appeal. It is needless to mention that at the prima-facie stage Revenue's interest cannot be sacrificed following the judgements of Apex Court in Assistant Collector v. Dunlop India Ltd. - 1985 (19) E.L.T. 22 (S.C.) Benara Valves Ltd. v. Commissioner - 2008 (12) S.T.R. 104 (S.C.) = 2006 (204) E.L.T. 513 (S.C). 36. Registry to place the record before the referring Bench for passing appropriate order. (Pronounced in the open Court on 13.8.2012) D.N. Panda Memeber (Judicial) FINAL ORDER In view of the majority order, the pre-deposit of excess exemption availed from 1.4,08 onwards (to be quantified by applicant) is required to be made in terms of the decision of learned Brother Member(Technical) and consented by learned Brother Member (J ..... X X X X Extracts X X X X X X X X Extracts X X X X
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