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TMI Blog2014 (9) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal was admitted by this Court on 8-2-2012 for consideration of following substantial questions of law : (a) "Whether the Tribunal below committed substantial error of law in allowing Cenvat Credit of actual duty paid on the grey fabrics in terms of Rule 3 of the Cenvat Credit Rules, 2001 and simultaneously permitting the assessee to avail of deemed Modvat Credit on the same fabrics under the provisions of Notification No. 7/2001-C.E. (N.T.), dated March 1, 2001 and 53/2001-C.E. (N.T.), dated June 29, 2001, even though it is restricted in terms of paragraph 4 of these Notifications?" (b) "Whether the Tribunal below committed substantial error of law in holding that double credit on the same inputs can be availed of?" 2.&em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of above mentioned notifications. Accordingly, the assessee availed deemed Modvat credit of Rs. 28,43,967/- for those fabrics also. 2.3 A show cause notice dated 7-3-2003 was issued proposing to deny the credit so availed by the respondent as aforesaid. It was stated and the assessee was asked to show cause as to why it availed modvat credit of actually duty paid on the fabrics as well as it took the deemed credit in terms of the above Notification which provided such availment of credit at the time of clearance of the processed fabrics. The adjudicating authority confirmed the same and imposed penalty. The assessee appealed against that order. The Commissioner (Appeals) held that as far as deemed credit of Rs. 28,43,967/- avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not preclude taking of credit on any other input other than the declared inputs. He further submitted that even if, for the sake of argument, the observation of the Tribunal, is to be accepted. The respondent took deemed credit on grey fabrics also took and the actual credit of duty also on the grey fabrics, and therefore, no other output available in respect of which the deemed credit could have been taken, it was submitted that the assessee's conduct was not inadvertent, but he took deemed credit first deliberately and at a later stage took the actual credit to circumvent the prohibition provided in paragraph 4 in the Notifications. He further submitted that in view of the provisions of the relevant rules, and in view of the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived from 100% EOUs during the period from 1-3-2001 to 27-2-2002. 5.1 Furthermore, when the assessee received duty paid unprocessed grey fabrics from 100% Export Oriented Units, the same were accompanied by duty paying documents and it was reasonable to presume that the Export Oriented Units must have taken the credit for themselves, therefore the assessee could not have taken the deemed credit. There was no input stage duty credit left so as to avail any deemed credit. If anyhow the assessee had taken the deemed credit at that stage, it was not permissible for the assessee to take actual credit of the duty at subsequent stage. The assessee calculatively did not choose to avail the actual credit but taking of it was postponed at late ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under Rule 3 of the Cenvat Credit Rules, 2001 as well as under Rule 11 of said rules on the basis of paragraph 4 above. An attentive reading of explanation to paragraph 4 above makes it clear that the only exception to paragraph 4 is in the case of taking of actual credit under Rule 3 on capital goods. In other words, assessee may take deemed credit as well as actual credit on the capital goods only. When it comes to the inputs, it is only one time credit which is permissible. The assessee may take the benefit of deemed credit, in which case the actual credit benefit would not be available on inputs. Both the facilities cannot be availed together. In the instant case, the assessee had already availed deemed credit, therefore subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X
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