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TMI Blog2019 (3) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... e law laid down in Hello Minerals Water (P) Ltd. and Precot Meridian Ltd, we are of the considered opinon that the Tribunal is well within its jursidction in regularizing the deemed credit under Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998 as the benefit taken by the assessee under Rule 57H was paid back, i.e.: reversed. In the factual aspect of present case where there is no prohibition in the Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998 from reversing the Credit availed on the input to avail the benefit under said Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998 and the law laid down Hello Minerals Water (P) Ltd. and Precot Meridian Ltd, we are of the considered opinion that the appellants are not benefitted by the law laid down in Dilip Kumar and Company and others [2018 (7) TMI 1826 - SUPREME COURT OF INDIA], where it was held that When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantial question are that the respondent is engaged in manufacture of various kinds of fabrics falling under Ch-50 to 55 of the Central Excise Tariff Act, 1985. (3) It is availing the benefit of deemed credit of duty paid on the inputs used for manufacture of final products in terms of Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998. The respondent No.1 availed deemed credit of ₹ 1,57,11,626/- and ₹ 21,417/- respectively in respect of final product i.e. man-made fabric lying in stock on 02/06/1998 and also unprocessed fabrics/semi-processed fabrics lying in stock as on 02/06/1998; which was processed and cleared from 02.06.1998 to 20.08.1998. (4) Two show-cause notices were issued to respondent No.1: (i) C.No.CEX/R-I/GWL/SCN/99/753 dated 21.01.1999 (ii)CEX/R-I/GWL/SCN/2/99/783 dated 29.01.1999. proposing disallowance of said deemed credit said to be wrongly availed on the allegation that it has taken deemed credit in the deemed credit register on the fabrics already cleared in payment of duty through PLA or MODVAT account i.e. RG23A Pt.II RG23C Pt.II and utilized the credit so availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly taken by them on actual basis. Therefore, allegation made in the show cause notice regarding violation of proviso to para 7A of Notification No.29/96 as amended by 28/98 does not sound reasonable and since the party has paid back the credit taken on actual basis, it is not justifiable to allege that credit was taken by them under any other Rule or Notification . The other allegation made in the notice that credit (deemed) should have been taken only at the time of clearance of final products (and not afterwards) is also not logical. The provision actually envisages that the party would be eligible for deemed credit at the time of clearance of goods, which means they cannot take credit before clearance. Once the clearance is effected, the credit can be taken thereafter. The phrase at the time of clearance is not to be taken too literally. If the party would have taken credit the very same day, there could have been a farcical dispute of hours or minutes. The party are correct in taking credit in so for it has been taken subsequent to clearance of goods. The other allegation made in the notice also does not seem to carry weight. Para 3 of Notification No.29/96 says that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,57,11,626/- and ₹ 21,417/- on 21.08.1998 for the period from 02.06.1998 to 20.08.1998 on the final product i.e. Man made fabric and cotton fabric respectively lying in stock on 02.06.1998 and also on the final product manufactured from unprocessed fabric/ semi processed fabric lying in stock as on 02.06.1998 in terms of Para 7A of the Notification no.28/98-CE (NT) dated 18.07.1998, which had already been cleared on payment of duty from 02.06.1998 to 20.08.1998 by them from their factory thus, I hold that respondents were not entitiled to take deemed credit on the final product which were already cleared. In other words, they could have taken the credit at the time of clearance only on final products of such fabrics. The second condition was also not fulfilled by the resopndents that deemed credit was taken by the reposndents was utilized for payment of duty in respect of fabrics manufactured from the declared inputs on which regular modvat credit of duty paid was availed whereas deemed credit should have been utilized only towards payment of duty of excise leviable under the Central Cexicse Act, on the said final products i.e. Final product declared and covered under Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilizing duty paid inputs, according to Central Excise Rules, he was entitled to the benefit of MODVAT Scheme and was entitled to get credit for the duty of excise paid on the inputs which were utilized for manufacture of final product. The credit amount was adjusted against the duty leviable on the final product. As soon as the inputs are purchased, the duty paid on the inputs was entered in a register which had to be maintained statutorily recording the amount of credit allowable to the manufacturer. The problem arose when some of the goods manufactured by the appellants were exempted from duty by notification No.69/86-CE dated 10th February, 1986. The notification was amended by a further notification No.106/88 dated 1st March, 1988 by which copper winding wires were exempted from payment of the whole of the duty subject to the condition that the final products were manufactured from copper wire bars of over 6 mm and also subject to the stipulation that-(b) No credit of the duty paid on goods (a)(ii) above, used in their manufacture, has been taken under rule 57A of the said Rules. The manufacturer reversed the credit entries of duty paid on inputs which were utilized for manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Mill was a composite Mill and was in a position to ascertain the variety and quantity of yarn entering into manufacture of export production of grey fabrics and grey fabrics means for home consumption. It was further found that the assessee had deferred the payment to the stage of clearance of grey fabrics, which was later on reversed and has not taken credit on account of such reversal. It was, in this factual background, held by their Lordships: 8. . Under the notification, mode of payment has not been prescribed. Further, exemption is given to the final product, namely, grey fabric under the Central Excise Act, 1944, levy is on manufacture but payment is at the time of clearance. Under the Act, payment of duty on yarn had to be at the spindle stage. However, when we come to the Exemption Notification no. 14/2002-CE, the requirement was that exemption on grey fabrics was admissible subject to the assessee paying duty on yarn before claiming exemption and subject to the assessee not claiming CENVAT credit before claiming exemption. The question of exemption from payment of duty on grey fabrics arose on satisfaction of the said two conditions. In this case, payment of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereagainst. In the ipmpugned judgment, the Tribunal has decided the issue in favour of the assessee relying upon the aforeaid two decisions. 5. We, thus, do not find any reason to interfere with this order. The appeal is dismissed accordingly. (13) In Hello Minerals Water (P) Ltd. (supra) referred to in Precot Meridian Ltd (supra) , the facts were that certain final products of Chapter 39 of the Schedule to the Central Excise Tariff Act were fully exempted from Central Excise Duty under Notification No.15/94-C.E., dated 01/03/1994. The condition for exemption was that no MODVAT Credit should be availed on the inputs used in manufacturing of these final products. The assessee had availed the credit on the inputs but reversed subsequently. The issue was whether reversal of credit after availment can satisfy the condition of nonavailment of credit under the exemption notification. It was accordingly held:- 17. The question as to whether manufacturer can be treated as not having taken credit on the inputs used in the manufacture of final product, even though it was originally taken but subsequently reversed, has been decided by a five Member Bench of the Tribunal in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the directions, the party paid the cerdit of ₹ 1,70,89,884/- (BED) and ₹ 24,71,099/- (AED T TA) taken on actual basis and took deemed credit of ₹ 1,57,11,626/- on MM Fabrics and ₹ 21,417/- on Cotton Fabrics cleared between 02.06.98 and 20.08.98 It is obvious here that the party have paid back the actual credit taken by them and took deemed credit which was much less than the credit initially taken by them on actual basis. Therefore, allegation made in the show cause notice regarding violation of proviso to para 7A of Notification No.29/96 as amended by 28/98 does not sound reasonable and since the party has paid back the credit taken on actual basis, it is not justifiable to allege that credit was taken by them under any other Rule or Notification . (15) When these findings are tested on the anvil of the law laid down in Hello Minerals Water (P) Ltd. (supra) and Precot Meridian Ltd (supra) , we are of the considered opinon that the Tribunal is well within its jursidction in regularizing the deemed credit under Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998 as the benefit taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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