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TMI Blog2014 (3) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-1-2014 - S S Kang And P K Jain, JJ. For the Appellant : Shri V Sridharan, Sr. Adv. For the Respondent : Shri B S Meena, Additional Commissioner, AR PER : P K Jain In this order, we are dealing with four appeals. Three appeals are filed by appellant, M/s. Raymond Ltd. The first appeal (appeal No. E/3090/04) pertains to Raymond Ltd. (Textile Division), Thane. The second appeal (appeal No. E/1963/04) pertains to Raymond Ltd., Nashik. The third appeal (appeal No. E/3002/04) also pertains to Raymond Ltd., Nashik. The fourth appeal is filled by Shri R.K.Shriyan, DGM, Raymond Ltd., Nashik. The first two appeals were decided by this Tribunal wherein part of the appeal was allowed and part was remanded to the Commissioner for re-adjudication. Revenue filed appeal against the said order of the Tribunal before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court, in turn, has remanded the matter to this Tribunal for re-adjudication. 2. Common issue is involved in the first three appeals and fourth appeal is relating to penalty. The issue in brief is that the appellant had accumulated credit of additional duties of excise (textile and textile articles) (hereinafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss-utilization of AED(T TA) was not permitted for purpose of payment of AED(GSI). However, new Cenvat Credit Rules were brought into force in 2000 and with effect from 1.4.2000 to 30.6.2001, due to transitional provisions contained in the new Rules, the appellant acquired right to use the said credit for purpose of payment of AED(GSI). During the period 1.4.2000 to 30.6.2001, cross-utilization was allowed as held by this Tribunal in the case of Reliance Industries (supra). The said decision has been further followed by the Tribunal in the case of Grasim Industries Ltd. vs. CCE, Indore (supra). In view of this legal position, the appellant acquired a vested right to use the accumulated credit as on 30.6.2001 for payment of AED(GSI). With effect from 1.7.2001, new Cenvat Credit Rules were introduced and in the new Cenvat Credit Rules, again the cross-utilization was not permitted. However, since they had already acquired the vested right to use the accumulated cenvat credit relating to AED(T TA) for payment of AED(GSI), this right cannot be taken away by the amended Rule and the amended Rule did not have any retrospective effect and, therefore, they have correctly utilized the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit can be utilized in accordance with these Rules (new Rules). The learned AR further argued that in 2001 separate Cenvat Credit Rules were notified by the Government (which were hitherto part of Central Excise Rules) and Rule 3(6)(b) specifically stated for utilization of AED(T TA) for purpose of AED(T TA) and here again, the new transitional provision stated that the accumulated credit shall be allowed and utilized in accordance with these Rules. From the legislative history as also the purpose for which AED(T TA) is collected, it is abundantly clear that credit of AED(T TA) can be utilized only for purpose of payment of AED(T TA). He further argued that under the circumstances, there cannot be any vested right to the appellant. The appellant has utilized the credit in 2003 and as per the Rules existing at that point of time, AED(T TA) could have not been utilized for payment of any other duty. The learned AR further argued that the decision in Reliance Industries (supra) was challenged by the department. An application was made to the Tribunal to refer the point of law to the Hon'ble Gujarat High Court, which was turned down. However, thereafter the department filed reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2001, even in year 2003, the learned AR quoted the Hon'ble Supreme Court's judgment in the case of National Engineering Industries vs. CCE, Jaipur reported in 2005 (188) ELT 471 (SC). In the said case, the Hon'ble Supreme Court has very categorically held that the law prevalent at the time has to be applied. In this case, refund was pertaining to the period when the doctrine of unjust enrichment was not brought into the statute book. However, when the refund was being granted, the principles of unjust enrichment was brought into the law and the Hon'ble Supreme Court has categorically held that the refund claim has to be examined with reference to the new law. The learned AR further stated that a review petition against the said judgment was also dismissed by the Hon'ble Supreme Court. He stated that in view of this decision, even if it is presumed that during the period 2000 to 2001, the appellant was entitled to use (which itself is incorrect) the said credit for payment of AED(GSI), the same cannot be made applicable in January to May 2003 when the law specifically prohibited the same. In case of the appellant, majority of the accumulated credit was pertaining to the period be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional Duties of Excise (Textiles and Textile Articles) Ordinance, 1978 (4 of 1978), which came into force on 4 th October, 1978. The Ordinance imposed an additional duty of excise at 10 per cent of the amount of excise duty chargeable under the Central Excises and Salt Act, 1944, read with any notification issued by the Central Government in relation to the said excise duty, in respect of the goods specified in the Schedule to the said Ordinance. 3. The Bill seeks to replace the provisions of the Ordinance. NEW DELHI H.M.PATEL The 14 th November, 1978" As the Act is very brief, the same is reproduced as under:- "ADDITIONAL DUTIES OF EXCISE (TEXTILES AND TEXTILE ARTICLES) ACT, 1978 (40 OF 1978) [6th December, 1978] An Act to provide for the levy and collection of additional duties of excise on certain textiles and textile articles. Be it enacted by Parliament in the Twenty-ninth Year of the Republic of India as follows:- 1. Short title and commencement. -(1) This Act may be called the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. (2) It shall be deemed to have come into force on the 4th day of October, 1978. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ---------------------------------------------------------------------- S.No. Description of goods ---------------------------------------------------------------------------------------------- (1) (2) 1. Man-made fibres, other than mineral fibres man-made filament yarns, cellulosic spun yarn and non-cellulosic wastes, all sorts as described in Item No. 18 I, 18 II, 18 III and 18 IV respectively of the First Schedule to the Central Excises and Salt Act, 1944. 2. Cotton yarn, all sorts described in Item No. 18A of the First Schedule to the Central Excises and Salt Act, 1944. 3. Woollen and acrylic spun yarn as described in Item No. 18B of the First Schedule to the Central Excises and Salt Act, 1944. 4. Non-cellulosic spun yarn as described in Item No. 18 E of the First Schedule to the Central Excises and Salt Act, 1944. 5. Cotton fabrics 6. Silk fabrics 7. Woollen fabrics 8. Man-made fabrics. 9. Wool tops." Section 3(2) very specifically provides that the said levy is being levied for purposes of the Union and the proceeds thereof shall not be distributed amon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y paid under section 3 of the Customs Tariff Act, 1975 (51 of 1975), shall be utilized only towards payment of duty of excise leviable under the said Additional Duties of Excise (Goods of Special Importance) Act ; and ..". From the reading of Rule 57F(12) and the above mentioned clause, it is very clear that there was a specific restriction to utilize the credit of AED(T TA) for payment of AED(T TA) alone. Similarly, credit of AED(GSI) was to be utilized only for payment of AED(GSI). The legislative intent was clear. This was also the understanding of the textile industry and the Revenue. With effect from 1.4.2000, the Central Excise Rules relating to credit of duty were redrafted/re-casted and the new Rules included were self-contained inasmuch as various Notifications governing the subjects were also merged in the new Rules. Rule 57AA defined various terms. Rule 57AB specified that a manufacturer of final product shall be allowed to take credit of various types of specified duties. Clause (iii) of Rule 57AB(1) specifically listed additional duty of excise leviable under Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. Similarly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of AED(GSI) or vice versa. The words "under the said Act" have been used twice and separately for AED(T TA) and AED(GSI). Even the circulars issued at the time of introduction of new Rules did not indicate any intention to permit cross-utilization of AED(T TA). Rule 57AG governs the transitional provision. Sub-rule (1) of the said Rule reads as under:- "(1) Any amount of credit earned by a manufacturer under rules 57A,57B or 57Q, as they existed prior to 1st day of April, 2000 and remaining unutilized on that day shall be allowable as CENVAT credit to such manufacturer under these rules, and be allowed to be utilized in accordance with these rules." In 2001, the Government decided to frame separate Cenvat Credit Rules (which were hitherto part of Central Excise Rules) i.e. the Cenvat Credit Rules, 2001. Rule 3 listed various commodities in respect of which cenvat credit would be allowed. Sub-rule (3) of Rule 3 again provides that cenvat credit may be utilized for payment of any duty of excise on any final product. However, sub-rule (6) of Rule 3 puts restriction on the utilization/cross -utilization of different types of duties. Sub-rule (6) reads as under:- "( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounted for under that head and also used for that purpose. In case credit of such duty is allowed to be used for duty liability of other type, the quantum and purpose of collecting the said duties will get defeated/distorted. For example, if credit of AED (T TA) is allowed to be used for payment of AED(GSI), the collection of AED(GSI) will come down by an amount equivalent to the cross-utilization of AED (T TA). Obviously, this will distort the whole collection system. Similar will be the position if credit of NCC duty is allowed to be used for payment of duty liability under AED (T TA) or AED(GSI). Further, it is also important that there should not be any cascading effect in respect of even individual duties. For example, if AED (T TA) collected at the fibre stage and again at the yarn or fabric stage, then there would be cascading effect of this levy. In order to balance out the two objectives, the law provided for taking the credit and also has put restriction on utilization of such credit to the respective field. Rule 9 of the Cenvat Credit Rules, 2001 deals with the transitional provisions and reads as under:- "9. Transitional provision .- (1) Any amount of credit earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it stood at the time of utilization. Similarly, availment of credit will be governed by the law on the date of availment. We have through the Hon'ble Supreme Court's judgment in the case of National Engineering Industries ( supra). The facts of this case are similar to the present case though relating to refund. The Hon'ble Supreme Court in the said case has observed as under:- "3. The period for which refund is claimed is from 1976-1977, 1977-1978 and 1978-1979. However, it appears that there was a dispute between the Appellants and the Respondent as to how the benefit under Notification No. 198/76-C.E., dated 16th June, 1976 was to be calculated. This dispute was ultimately decided by CEGAT in favour of the Appellants. The claim for refund had then to be worked out. Pursuant to the decision of CEGAT, the Appellant's claims for refund were taken up for consideration in 1993. By that time Section 11-B had been amended and the doctrine of unjust enrichment had been incorporated in Section 11-B. Thus even though the Appellant's refund claims were allowed, refund was not granted to them on the ground that they had recovered amounts from their purchasers. The amounts were direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said case, a HUF was partner in two firms and assessments for the years 1950-51, 1954-55 and 1956-57 were completed under the old Income Tax Act, 1961 came into force and the Income Tax department determined several liabilities on the members of the HUF. It is in this context that the Hon'ble Supreme Court held that if the liability is so fastened, it would amount to retrospective operation of sub-section (6) of Section 171. Similarly, in the case of Shah Sadiq Sons (supra), the Hon'ble Supreme Court was dealing about the change in liability with reference to the old Income Tax Act of 1922 and the new Income Tax Act of 1961 and it is in that context that the Hon'ble Supreme Court has held the right to carry forward loss is a vested right and remains unaffected by subsequent amendment. In the present case there was no such right undisputedly till March 2000. Even during the period April 2000 to June 2001 there was no such right and from July 2001, again the law specifically prohibited cross-utilization of the credit. It is only during April 2000 to 2001, the drafting of the law was interpreted in a particular way by this Tribunal, which is being claimed as a vested right. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t credit of AED (T TA) could be utilised for payment of any other kind of duty of excise. Learned SDR has contested this argument by referring to sub-rule (6). Sub-rule (6), shorn of irrelevant clauses, reads as under : "Notwithstanding anything contained in sub-rule (1), - (a) ......... (b) Cenvat credit in respect of - (i) the additional duty of excise under Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978; (ii) the additional duty of excise under Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957; (iii) the National Calamity Contingent duty under Section 136 of the Finance Act, 2001; and (iv) the additional duty under Section 3 of the Customs Tariff Act, 1975, equivalent to the duty of excise specified under clauses (i), (ii) and (iii) above, shall be utilised only towards payment of duty of excise leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, or under the said Additional Duties of Excise (Goods of Special Importance) Act, or the National Calamity Contingent duty under the said Section 136 of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he non obstante clause of sub-rule (6). Though this argument might seem to be impressive superficially, it is found, on deeper analysis, to be inconsistent with the legislative purpose which is writ large on the scheme of the law embodied in the Cenvat Credit Rules. 4 . It is settled law that a provision of law incorporating a non obstante clause containing mention of another provision has overriding effect. It was held to this effect, in the case of Jindal Poly Films Ltd. v. Commissioner of Central Excise, Meerut-II [2006 (198) E.L.T. 3 (S.C.)], by the Hon'ble Supreme Court referring to Rule 57B(1) which read: "Notwithstanding anything contained in Rule 57A, a manufacturer of final products shall be allowed to take credit of the specified duty on the following goods". It was held that the goods which had been specified under Rule 57B(1) had been given a special treatment different from the treatment given to the goods specified under Rule 57A as sub-rule (1) of Rule 57B opened with a non obstante clause. In the case of Indica Laboratories Pvt. Ltd. v. Commissioner of Central Excise, Ahmedabad [2007 (213) E.L.T. 20 (Tri.-LB)], a Larger Bench of this Tribunal took note of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of a general provision providing for utilisation of Cenvat credit for payment of any duty of excise, sub-rule (6) restricts utilisation of credit to payment of the same kind of duty of excise, that is, credit of AED (T TA) to be utilised only towards payment of AED (T TA) on final product. The legislative scheme is that the benefit provided under sub-rule (3) can be availed only to the extent permitted under the restrictive provision viz. sub-rule (6). SDR was right when he argued that the two sub-rules should be read together. 5 . In the result, the appellants could have utilised Cenvat credit of AED (T TA) only towards payment of the same kind of duty of excise i.e., AED (T TA) in terms of Rule 3(6)(b) of the Cenvat Credit Rules, 2001. In fact, they utilised Cenvat credit of AED (T TA) paid on their inputs, for payment of BED and AED (GSI) on their final products. This was not permissible in law. The appellants, therefore, do not have a case on merits." 8. In view of the above, appellant's appeal (No. E/1963/04 and E/3090/04) in respect of cross-utilization of credit of AED(T TA) for payment of AED(GSI) is rejected. The appellant is directed to pay the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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