9911796707
TMI Blog2013 (9) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... requires a manufacturer located in J & K to clear the goods on payment of duty by first exhausting the Cenvat credit available with them and then to pay the balance amount of duty through PLA. The duty paid through PLA is allowed to be availed as self-credit which can again be utilized by them for payment of duty. The said unit was located in J & K was availing the procedure as prescribed in Notification No. 56/2002 and was clearing their goods on payment of duty. The said duty paid by the input supplier was being availed as Modvat credit by the appellants. 3. The demand confirmed in the present cases are by denying the Cenvat credit so availed by the appellants. The Revenue's case is that M/s. Satya Metals located in J & K were not entitled to the benefit of Notification inasmuch as they were 100% EOU. As such the duty paid by M/s. Satya Metals by utilising the self-credit was not proper. 4. After hearing both the sides, we find that credit availed by the appellants is admittedly of duty paid by M/s. Satya Metals. There is no dispute about the fact that M/s. Satya Metals have cleared the inputs on payment of duty. The dispute revolves around the fact that when the proceedings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not at input receiver's end. If we apply the ratio of above decision to the facts of the present case, we note that in the said decision, the entire credit used for payment of duty was availed fraudulently and as such, was not available, and as such duty paid was, in fact, not paid, whereas in the instant case, duty actually stands paid and the dispute revolves around the legal interpretation of area based exemption notification, i.e., whether M/s. Satya Metal was entitled to self-credit or was required to pay duty in cash out of their PLA. As already observed, even if this ongoing dispute is settled against M/s. Satya Metals, they would become liable to pay duty on their final product in cash as against the self-credit account. The duty paid character of final product will not change inasmuch as M/s. Satya Metals is bound to pay duty on the final product manufactured by them and cleared on excise documents like invoices. We really fail to understand as to how the dispute at M/s. Satya Metals end, i.e., whether duty should have been paid under self-credit scheme in terms of notification or by paying the same out of PLA, would affect the appellants' entitlement to the credit of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o him at the end of the month and pay only the balance amount of duty, if any payable, through PLA. He can either seek cash refund of the duty paid through PLA or at his option, he can take its self-credit in PLA which can be utilized for clearance of the finished goods next month. Though the goods cleared by unit located in the exempted areas under Notification No. 56/2002 are cleared by availing duty exemption, in terms of the provisions of Rule 12 of the Cenvat Credit Rules, 2004, the customer using the goods as input would be eligible for Cenvat credit as if no portion of duty paid on the goods was exempted under the said Notification. In this case, the department's objection to availment of Cenvat credit by the appellant is that the supplier of inputs - M/s. Satya Metals, being a 100% EOU, is not eligible for the area based exemption under Notification No. 56/2002-C.E., as this Notification does not specifically mentions that the same would be applicable to 100% EOU and in terms of proviso to 5A(1) of the Central Excise Act, 1944 under which Notification No. 56/2002-C.E. has been issued, unless specifically provided under this Notification, no exemption shall apply to exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or challenged by the officer in-charge of recipient unit for the purpose of permitting Cenvat credit available, is not applicable, as this is not the case of normal Cenvat credit. When in terms of Rule 12, availability of full Cenvat credit to the appellant on the basis of invoices issued by the supplier unit - M/s. Satya Metals is based on the status of M/s. Satya Metals as a unit availing Notification No. 56/2002-C.E., the jurisdictional Central Excise officers of the appellant's unit, before permitting Cenvat credit as if no portion of duty was exempted, are entitled to ascertain as to whether the supplier unit - M/s. Satya Metals are actually eligible for Notification No. 56/2002-C.E., and if they find that M/s. Satya Metals are not eligible for Notification No. 56/2002-C.E., the credit as per the special dispensation of Rule 12 can be denied and only the normal credit to the extent of duty paid through Cenvat credit which has not been refunded, would be admissible. 10.1 I also find that the jurisdictional Commissioner has also issued a show cause notice seeking denial of exemption under Notification No. 56/2002-C.E. to M/s. Satya Metals and also for demand of duty amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & K unit has claimed Area Based Exemption under a notification. Factually, show cause notice appears to have been issued to the appellant to indirectly adjudicate the case of M/s. Satya Metal while Satya Metal was not a Co-notice. M/s. All India Metal Traders was a dealer of Satya Metal (J & K unit) which was the buyer of the product and the appellant was ultimate buyer of the said goods from All India Metal Traders. Whether duty paid by the appellant to All India Metal Traders on the aforesaid scenario shall entitle the appellant to Cenvat credit of duty so paid was anxiety of Revenue. Perusal of show cause notice does not indicate discharge of duty by the appellant either to Satya Metal or All India Metal Traders. What that was concern of the learned Adjudicating Authority was Satya Metal located in Area Based Exemption Zone not paying duty but availing credit of duty collected to discharge its liability whether shall confer right to the appellant to get Cenvat credit of duty paid by it against its purchases from dealer of Satya Metal. Similarly, All India Metal Traders purchasing goods from Satya Metal whether shall come in par with Satya Metal or distinguished was a concern. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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