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TMI Blog2023 (2) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt at factory, and on the other hand, paying Central Excise duty on Finished Goods on clearance from factory. On 09.07.2004, petitioner had accumulated amount of CENVAT credit in his statutory record for both the factories separately. 1.1. The Central Government has issued two notifications for Textile Industry for levy of duty. First one was Number 29/2004-CE dated 09.07.2004, manufacture of polyester yarn would need to pay duty on finished goods and he would be also eligible to avail CENVAT credit of duty paid on inputs. In second Notification No. 30/2004-CE dated 09.07.2004, manufacturer of polyester yarn will be exempt from payment of duty on finished goods with the condition that no CENVAT credit of duty paid on input would be availed. 1.2. As averred in the petition, the petitioner exported finished goods from both the factories, on the payment of duty and filed the rebate claim with Respondent No. 3 and Respondent No. 4. This was rejected on various grounds. The legal grounds, based on which rebate claims were rejected, were decided in his favour in separate proceedings by the Commissioner (Appeals) and Tribunal. According to the petitioner, during personal hearing, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice on 21.10.2013 came to be issued for demanding Rs. 43,41,820/- which was used from accumulated CENVAT Credit. The Commissioner (Appeals), Surat rejected the Order-in-Appeal by order dated 23.10.2013 for utilization of Rs. 99,929/- out of the lapsed Credit. On 30.10.2013, the Commissioner (Appeals), Vapi passed order and held that petitioner had maintained separate records. 2.6. On 01.11.2013, the show cause notice was issued by Commissioner for transfer of CENVAT Credit Rs 1,58,73,511/- from Masat, Silvassa factory to Kim, Surat factory. On 18.11.2013, the show cause notice was issued for rejection of rebate claim for Kim, Surat factory. A show cause notice came to be issued on 23.01.2014 by Joint Assistant Commissioner for rejection of the rebate claim of goods exported from Kim, Surat factory. 2.7. On 06.03.2014, the order-in-original was passed by Commissioner and confirmed the demand of Rs 1,58,73,511/-. On 07.05.2014, the order came to be passed by the Joint Assistant Commissioner, Surat rejecting the rebate claim of export made from Kim, Surat factory. This was challenged before the Joint Commissioner and on 31.12.2014 and it confirmed the demand of Rs.43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice has been issued for accumulated CENVAT credit and therefore, if the rebate claim is denied on the utilization of that amount, after denial of rebate claim, again the amount of credit needs to be allowed. It is a case of double demand by not sanctioning the rebate claim and not allowing to restore the CENVAT credit amount which has been utilized. 3. The prayers sought are as follow:- "A. Your Lordship may be pleased to admit this Petition. B. Your lordship may be pleased to allow this petition. C. Your lordship may be pleased to issue writ of Mandamus or any other appropriate writ, and to quash the impugned order No. 29-30-31/2021-CX (WZ)/ASRA/Mumbai dated 21/01/2021 passed by the Respondent No. 2 and enclosed herewith and marked as Annexure- 'Z'. D. Your Lordship consequently may direct the Respondent no. 3 and Respondent no. 4 to sanction of rebate claim. E. Your Lordship, to direct the Respondent no. 3 and Respondent no. 4 to grant interest for the delayed period of sanction of rebate claim. F. Your lordship may be pleased to grant such other further reliefs that may be deemed fit and proper in the interest of justice in favour of our petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .30/2004-CE issued under Section 5A, hence, the provisions of Rule 11(3)(2) are applicable to the present case. It is thus contended that both the Notifications No.29/2004 and 30/2004 are independent notifications and there is no restriction on availing both simultaneously. However, the manufacturer should maintain separate books of accounts for goods availing Notification No.29/2004 and for the goods availing Notification No.30/2004. There is nothing on the record which proves that the petitioner maintained the separate books of accounts for goods availing both the said notifications. 5.5. It is the say of the respondent that petitioner's contention that simultaneous availment of Notifications No.29/2004 and 30/2004 both dated 09.07.2004 is permissible as per Circular 795/28/2004-CE dated 28.07.2004. It is further the say of the respondent that any assessee when chooses for such simultaneous availment of these notifications, the credit in their balance after reversing the amount of CENVAT credit pertaining to input lying in stocks or in process or contained the final produce shall not lapse, is not a correct contention. 5.6. Rule 11(3) of the CENVAT credit Rules is emphasized up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner (RA) passed an ex-parte order and violated the principle of natural justice. According to the respondent, communication issued by the Assistant Commissioner (RA), Mumbai, an opportunity of personal hearing was granted to the petitioner in respect of the Revision Application. In response, the Director of Mohit Industries Ltd. - petitioner Vide letter dated 09.09.2019 informed the Principal Commissioner (RA), Mumbai that they did not want any further person hearing and requested to pass the order considering the documents available on record, and hence, the Principal Commissioner (RA) passed the order on 21.01.2021 after considering all aspects. Therefore, the order impugned and findings of the Revisional Authority are legal and do not require any interference. 5.11. All in all, it is urged that after insertion of sub-rule (3) of Rule 11 of the CENVAT credit Rules, 2004 w.e.f. 01.03.2007 as the petitioner availed total exemption on its final product during the particular period and as the duty paid from such lapsed CENVAT credit on the exported goods at a much later date since is not the payment of duty, therefore, the rebate claims have not been admitted. The rebate claim had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would mean that the appropriate duty has not been paid and the consequences of non-payment of duty were followed. 6. Affidavit-in-rejoinder on behalf of the petitioner is filed contending therein that for the transfer of CENVAT credit amount of Rs.1,58,73,511/- for the transfer of factory with plant and machinery along with stock from Silvassa to Surat factory, nothing has been stated in the affidavit-in-reply. The amount of CENVAT credit was utilized for payment of excise duty at the time of export of finished goods. The notice for the wrong transfer of the CENVAT credit was issued on 01.11.2013 which was finally allowed by the Commissioner in Order-in-Original on 29.09.2020. The rebate claim of Surat factory was rejected on the ground of wrong transfer of credit, which was finally decided by the Commissioner as legal transfer of CENVAT credit. On this important point, nothing has been submitted in the affidavit-in-reply. The order dated 29.09.2020 has not been submitted before the Principal Commissioner (RA) because ex-parte order was passed without following principle of natural justice and without providing fresh opportunity of hearing when Adjudicating Authority changed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s preferred by the petitioner against the Order-in-Appeal dated 08.11.2012 passed by the Commissioner (Appeals), Central Excise, Vapi and the order dated 03.06.2015 passed by the Commissioner (Appeals)-II, Central Excise and Service Tax, Vadodara have been threadbare examined by the Revisional Authority. 8.1 The applicant preferred the Revision Application on the ground that the entire accumulated CENVAT credit, as per the allegation, is not illegal. The allegation is limited to the accumulated CENVAT credit lying in balance prior to 01.03.2010 having lapsed during the time of opting Central Excise Exemption Notification No.30/2004-CE dated 09.07.2004. 8.2. According to the petitioner, the Commissioner (Appeals) travelled beyond the scope of show cause notice. It appears that the applicant had exported polyester texturised filament yarn (finished goods) under Notification No.29/2004 dated 09.07.2004 which was manufactured from partially oriented yarn and availed CENVAT credit in the month of March, 2010. These finished goods were exported in March, 2010 and April, 2010 on payment of duty. The applicant was running the factory prior to 09.07.2004 when Notification No.30/2004 came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. The CBEC vide Circular No.795/28/2004-CX dated 28.07.2004 clarified that there is no restriction on availing both the notifications simultaneously. The CENVAT credit prior to 09.07.2004 was carried forward in the record maintained under Notification No.29/2004 and fresh CENVAT credit was availed and duty on finished goods was paid through this CENVAT Register. For any clearance of finished goods made under Notification No.30/2004, no CENVAT credit was availed on inputs and no duty was paid on the finished goods manufactured from such inputs. It is, therefore, the case of the petitioner that accumulated amount of CENVAT credit cannot be declared nonest and it can be legally used for the payment of duty on finished goods for subsequent clearance. It is further the say that provisions of Rule 11 (3)(ii) are not applicable to the current case as their final product POY is not absolutely exempt under Section 5A of the Central Excise Act and it is liable to duty at the rate given under Notification No.29/2004-CE and hence, it is exported under the payment of duty. It is held that the right to avail CENVAT credit accrues as soon as the scheme is availed. The right to adjust the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opted for benefit of exemption notification continuously for years onwards after 09.07.2004. The CENVAT credit balance carried forward in the CENVAT account lapsed after insertion of sub-rule (3) of Rule 11 of the CENVAT Credit Rules w.e.f. 01.03.2007 since the applicant availed total exemption on all the final products during the aforesaid period and as such the duty paid from such lapsed CENVAT credit on the said exported goods at a much later date is not a payment of duty and therefore, the rebate claims were rightly held inadmissible by Commissioner (Appeals). 10.1. While so holding it also had considered the insertion of sub-rule (3) to Rule 11 of the CENVAT Credit Rules vide Notification No.10/2007 dated 01.03.2007, which stipulates that if a manufacturer opts for exemption from whole of duty of excise leviable on the said final product under a notification issued under Section 5A of the Act or the said final product has been exempted absolutely under Section 5A of the Act, he shall be required to pay an amount equivalent to the CENVAT credit taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Government finds that the excess Cenvat credit lying in balance as on 09.07.2004 should have lapsed as on 01.03.2007 when sub- rule (3) of Rule 11 of the Cenvat Credit Rules, 2004 was introduced on a subsequent date. Government also observes that even if they had opted for the benefit of notification before 1.3.2007 they were required to expunge such credit when the rules were amended and the sub-rule (3) of Rule 11 of the Cenvat Credit Rules, 2004 was introduced. It is also on record that the Central Excise duty paid by the Applicant for the impugned exports for which they claimed rebate was paid out of such accumulated Cenvat Credit as on 09.07.2004 which should have lapsed w.e.f. 01.03.2007 as explained hereinabove. Since there was no accumulation of Cenvat credit validly in law, there was no question of duty being paid therefrom. 11. Government observes that the Applicant has relied upon Circular No.795/28/2004-CX dated 28.07.2004 which allows the manufacturer to avail both Notification Nos. 29/2004-C.E. and 30/2004-C.E. simultaneously. Even in this circular, at clarification to issue No. 2, it was clarified that for manufacturers who had pre-budget stock of inputs (or sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority to interpret that excess CENVAT credit lying in balance as on 09.07.2004 should have lapsed on 01.03.2007 when sub-rule (3) of Rule 11 of the CENVAT Credit Rules was introduced on subsequent date, with the amendment of the Rules, even if the option was for seeking the benefit of notification before 01.03.2007 was given, with the amendment of the Rule and particularly, subrule 3 of Rule 11 of the CENVAT Credit Rules, whether was needed to be expunged and the central excise duty paid by the applicant for the expunged exports for which the claim rebate was paid out of such accumulated CENVAT credit as on 09.07.2004 which should have lapsed w.e.f. 01.03.2007 and whether there was any accumulation of the CENVAT credit validly under the law and where the petitioner could have paid the duty therefrom, were the questions which have been answered by the revisional authority. 11. Without entering into as to whether the interpretation made is in accordance with law or not, this Court notices that the revisional authority itself has made a note of the fact that there was a change of the revisional authority. Relying on the written submissions of the petitioner of 09.09.2019, where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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