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TMI Blog2013 (9) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... dvat 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 future date is deniable - It may be stated that when inputs extinct upon use in manufacture of the finished goods, deferment of set off of Modvat credit was not permitted - No right was vested with the assessee to carry forward input credit beyond material period in absence of carry forward provision in the Notification in question - Apart from this, no claim for set off of input credit duly during material period proves oblique motive as well as premeditated design of assessee against Revenue intending to be enriched at the cost of the exchequer. Such an act also debars to plead that the proceeding is time-barred. It was rightly observed by ld. Technical Member that there was failure to fulfil mandatory condition of the Notification by the appellant when it failed to use the Modvat credit available to it during tax holiday period. Inadvertent mistake plea of appellant is certainly a misplaced sympathy to sway away Tribunal towards sympathetic consideration. Accordingly observation of learned Technical Member in this regard cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dated 28-10-2010. The notice proposed the denial of credit of Rs. 45,72,156/- availed by the appellant on 14-8-2009, i.e. after three and half years on receipt of furnace oil in their factory. The notice further alleges that the appellant should have taken the credit of the above amount during the period April, 2005 to March, 2009 and should have utilized the same for payment of duty on their final products, cleared during this period. As such, the credit was not utilized, the appellant ended by paying duty in cash on the higher side and subsequently filing the refund of the same. The said notice proposes recovery of erroneously availed refund of Rs. 41,71,424/-. The above notice was challenged by the appellant on merits as also on the limitation. The Commissioner vide his impugned order accepted the appellant s stand that availment of credit after a period of three and half years is in accordance with law, inasmuch t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing unutilised. In spite 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 applicant by invoking the longer period of limitation. Our attention was also drawn to the letter dated 17-8-2009 addressed to the Superintendent of Central Excise by the assessees indicating that credit of Rs. 44,54,275.00 in BED. Rs. 89,086.00 in ECESS Rs. 28,795.00 stands availed by them vide entry dated 14-8-2009 in their Credit Register for the period from 2005-06 to 2008-09. As such, the Revenue was put to notice as regards availability of credit in August, 09. The show cause notice stands issued subsequently on 28-10-2010. As such, we are of the view that the same is prima facie barred by limitation. 9. In view of foregoing discussion, we dispense with condition of pre-deposit of duty and penalty against the appellant and stay its recovery during the pendency of the appeal. 10. I have gone through the order recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 situation where such credit is used for export. Tribunal has also proclaimed a law that if a manufacturer closes down his operation then he can get refund of Cenvat credit in cash. Now let us take a case where a manufacturer in Jammu does not take Cenvat credit for first one year of operation when he has no exports. He pays duty liability through PLA and gets refund of duty paid. After one year when he starts exporting the goods he takes credit of the Cenvat credit that he could have taken in the previous year and utilizes it for exports and claims refund of such credit in cash. Now in this process he gets refund of Cenvat credit in cash for credit that he could not have got in the normal course. Let us now take a situation where the manufacturer proposes to close down his operation in the next year. Before closing down he can take credit of the Cenvat credit that he did not take earlier in the previous year and then closes down and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be called for considering that express provisions of notification as in force after 1-4-2008 has been violated as assessed by Member (Technical)? 20. The registry is directed to place the matter before the competent authority to take steps to resolve the above difference of opinion. 21. While hearing the interim application by the Division Bench on 15-2-2012 (disposed on 12-3-2012) the dispute as to whether there was irregular availment of refund of Rs. 41,71,424/- for which that was recoverable in view of violation of terms of Notification No. 56/2002-C.E., dated 14-11-2002 and whether Modvat credit of Rs. 45,72,156/- availed was wrong for which that was recoverable, both Members differed in their opinion. While ld. Judicial Member was of the view that pre-deposit was not required to be ordered during pendency of the appeal, reverse was the view of ld. Technical Member. Such difference, in principle gave rise to the following point of difference :- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was stated that the wordings of the notification was explicit to grant exemption only to the extent of duty liability (discharged through PLA) if Modvat credit available for set off was insufficient. Tribunal is expected to go by law what that governs the exemption since claimant was required to first exhaust Modvat credit available towards duty liability. On these premises, prima facie view of the ld. Technical Member in para 18 of the order was that pre-deposit at least in respect of excess exemption availed for the aforesaid period should be called for. 26. In the course of hearing of reference, ld. Counsel arguing for the appellant submitted that from November 2005 to March, 2009 no Modvat credit was availed on furnace oil and exemption by way of refund of duty paid through PLA was availed. Since accumulated Modvat credit was allowed to be used in August, 2009, there was revenue neutrality for which no pre-deposit proposed by ld. Judicial Member is correct. He relied on the decision of Apex Court reported in 2009 (235) E.L.T. 214 (S.C.) and judgment reported in 2012 (279) E.L.T. 166 (S.C.) as well as Tribunal s decision reported in 2008 (232) E.L.T. 681 (Tri.). It was also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. It is an admitted fact that the appellant collected public money to the extent of duty permitted to be set off against Modvat credit available to it during tax holiday period and took back the same as refund keeping the Modvat credit in tact for undue enjoyment in future which was not permissible in law. Had the appellant utilised the Modvat credit to discharge its duty obligation, the duty paid on the incremental value of the finished goods would have been refunded. But entire duty collected was taken back by the appellant which included the duty element on input collected by it from public. This practice was contrary to the mandate of the notification and has prejudiced Revenue. The Modvat credit accumulated in its account when used from August 2009 was sought to be recovered in adjudication as the practice followed by appellant was contrary to law. While Modvat credit existed on record of appellant and that was not utilised during material period in accordance with law, appellant s oblique motive was proved and deliberate abuse of notification came to record. Undue gain out of public money claiming illegitimate refund was debarred in adjudication. Thus, for the undue gain m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s exemption (refund) and right to claim that at a future date is deniable. It may be stated that when inputs extinct upon use in manufacture of the finished goods, deferment of set off of Modvat credit is not permitted. No right is vested with the assessee to carry forward input credit beyond material period in absence of carry forward provision in the Notification in question. Apart from this, no claim for set off of input credit duly during material period proves oblique motive as well as premeditated design of assessee against Revenue intending to be enriched at the cost of the exchequer. Such an act also debars to plead that the proceeding is time-barred. 33. Ld. Counsel s reliance on the judgment of Apex Court in the case reported in 2009 (235) E.L.T. 214 (S.C.) relates Notification No. 4/2006-C.E., dated 1-3-2006 while present case is relating to Notification No. 56/2002-C.E., dated 14-11-2002. Object of both the notifications were different. Appellant s further reliance on the judgment in CCE, Jammu v. New India Wire and Cables - 2008 (232) E.L.T. 681 (Tri.-Del.) was to support Revenue Neutrality plea. In that case set off of Modvat credit was claimed within next month of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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