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TMI Blog2008 (7) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... it of duty paid in cash and submit a statement to the jurisdictional AC/DC containing details in the next month before 7th to the month under consideration and AC/DC shall determine the amount correctly refundable to the manufacturer and intimate the same to the manufacturer by 15th of the next month. In case, the credit taken by the manufacturer is in excess of the amount determined by the AC/DC, the manufacturer is required to reverse the credit within 5 days from the receipt of the said intimation. The self-credit taken in the PLA can be utilized for payment of duty in the subsequent months which would be treated as cash payment. 2. During months of May, 2005 , July, 2005 and September to December, 2005, the appellants had utilized Rs. 20,19,827/- available in the Cenvat credit account for payment of service tax on GTA services. However, the appellants themselves noticed that such utilization of Cenvat credit for payment of service tax is in violation of the condition of Notification No. 39/2001 and, deposited the entire tax on GTA amounting to Rs. 21,63,090/- towards service tax and Rs. 43,243/- towards education cess for the period from May, 2005 to January 2006 on 4-4-2006 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts to ensure that they take correct amount as credit having chosen option to self-credit vis-a-vis the grant of refund by the department. Therefore, we do not think there is a substantive compliance as argued by the learned Advocate. The next argument advanced is that once they made payment in cash on 4-4-06, the excess refund becomes revenue neutral and therefore, the demand is not sustainable. It was also argued that while interpreting the exemption notification, the intention behind the same should be considered and once they made the payment through PLA, the intention behind the notification was fulfilled and if they are denied the benefit of Notification, the very purpose of the Notification would be defeated. She also argued that the demand for the month of May 2005 and July, 2005 are barred under limitation as they are beyond the period of one year from the relevant date under clause 2A which required the AC/DC to determine the refundable amount and intimate before 15th of next month. The correctly refundable amount was intimated only 30-6-06 for May, 2005 and June, 2005. The notices issued on 23-8-06 are beyond the period of one year from the date on which AC/DC as require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 4-4-06, we do not think that such an interpretation is possible. The Notification envisages a system of monthly accountal of Cenvat credit utilization and calculation of eligible refund amount. It also contemplates procedure for recovery or payment of excess refund to the manufacturer in case of mistake or oversight by a specific date in the next month. The Notification also provides for limitation in case of erroneous refund. Such being the case, acceptance of the appellant's contention that by paying service tax in cash on 4-4-06, the omission made in May, 2005 to December, 2005 can be regularized cannot be accepted. Once it, was found that they had taken excess refund, the proper action to be taken was to repay the amount with interest. In such a case, there would have been no requirement to pay service tax in cash. The appellants have to pursue other legal remedies as regards the excess payment, if any, made toward service tax. 9. In view of the above discussions, the demand for the months of May, 2005 arid July, 2005 amounting to Rs. 5,68,837/- is held non-sustainable. The appeal succeeds to the above extent only. (Pronounced in the open Court on 2008) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Sd/- (B.S.V. Murthy) (Archana Wadhwa) Member (Technical) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be granted by the jurisdictional Assistant Commissioner or Deputy Commissioner of Central Excise upon receipt of a statement of payment of duty from the manufacturer. According to the alternative procedure, a manufacturer could suo motu take credit of the amount of duty paid from PLA under intimation to the department. Both the procedures were elaborately laid down in the above Notification. The appellants chose to follow the "suo motu procedure" laid down in Para 2A of the Notification, which is reproduced below: "2A. Notwithstanding anything contained in paragraph 2, - (a) the manufacturer at his own option, may take credit of the amount of duty paid during the month under consideration, other than by way of utilisation of CENVAT credit under the CENVAT Credit Rules, 2002, in his account current, maintained in terms of Part V of the Excise Manual of Supplementary Instruction issued by the Central Board of Excise and Customs. Such amount credited in the account current may be utilised by the manufacture for payment of duty, in the manner specified under rule 8 of the Central Excise Rules, 2002, in subsequent months, and such payment should be deemed to be payment in cash: Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) to (e), he shall forfeit the option, to take credit of the amount of duty during the month under consideration, other than by way of utilisation of CENVAT credit under the CENVAT Credit Rules, 2002, in his account current on his own, as provided for in clauses (a) and (c); (g) the amount of the credit availed irregularly or availed of in excess of the amount determined correctly refundable under clause (e) and not reversed by the manufacturer within the period specified in that clause, shall be recoverable as if it is a recovery of duty of excise erroneously refunded. In case such irregular or excess credit is utilised for payment of excise duty on clearances of excisable goods, the said goods should be considered to have been cleared without payment of duty to the extent of utilisation of such irregular or excess credit. Explanation.- For the purposes of this notification, duty paid, by utilisation of the amount credited in the account current, shall be taken as payment of duty by way other than utilisation of CENVAT credit under the CENVAT Credit Rules, 2002." 13. For each of the months comprised in the period of dispute, the assessee had paid duty partly from PLA and partl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant condition attached to the Notification stood complied with when the amount of Rs. 20,19,827/- was paid on 4-4-2006. According to the learned SDR, the relevant condition attached to the Notification stood violated when credit of duty paid in cash on the final products during the period of dispute was taken suo motu by the party in excess of the extent of refund admissible to them. According to this school of thought, the manufacturer ought not to have utilised any CENVAT credit for payment of service tax for the period of dispute inasmuch as the second proviso to sub-rule(4) of Rule 3 of the CENVAT Credit Rules, 2004 barred utilisation of CENVAT credit of duty or service tax for payment of service tax where the assessee availed exemption under the above Notification in respect of their final products. In other words, CENVAT credit of duty or service tax could only be utilized for payment of duty on final products in respect of which exemption was availed in respect of such goods under Notification No. 39/2001-C.E. The learned SDR has argued that, by utilizing input service tax credit for payment of service tax on GTA service during the period of dispute, the assessee was actin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit, any credit availed could be reversed for the purpose of claiming the benefit of exemption under the Notification. The case law cited by the learned counsel is in support of this proposition. [1995 (79) E.L.T. 718 (Tri.); 1996 (81) E.L.T. 3 (S.C.); 2004 (174) E.L.T. 422 (All.)]. On the other hand, the learned SDR has referred to a plethora of decisions in support of his plea that exemption Notifications have to be strictly interpreted and, therefore, conditions of such Notifications have to be strictly complied with. The decisions cited by the SDR include- (i) Eagle Flask Industries Ltd. v. CCE, Pune [2004 (171) E.L.T. 296 (S.C.)]. (ii) Mihir Textiles Ltd. v. CC, Bombay [1997 (92) E.L.T. 9 (S.C.)]. (iii) Golden Dew Tea Factory v. CCE,. Coimbatore [2007 (219) E.L.T. 362 (Tri.-Chennai)] (iv) Amrit Paper v. CCE, Ludhiana [2006 (200) E.L.T 365 (S.C.) = 2008 (12) S.T.R. 536 (S.C.). 17. I have given careful consideration to the submissions and have found that there is consensus on the point that exemption Notifications have to be strictly construed and that conditions attached thereto have to be strictly complied with. But this strictness is of universal application in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Officer. 19. I note that the learned Member (Technical) of the regular Bench denied the benefit of the Notification to the appellants for the period Sept. to Dec.'05. Against this, the appellants have made out strong case on the strength of the decision of the learned Member in Genus Electrotech case. 20. In the result, with due respect for the learned Member (Technical), I concur with the view taken by the learned Member (Judicial). The appeal stands allowed. The Registry shall place the records before the regular Bench for pronouncement of the majority decision. Sd/- P.G. Chacko Member (Judicial) FINAL ORDER 21. In view of the majority decision, the impugned order is set aside and the appeal is allowed in its totality. (Pronounced in the Court on 7-11-2008) Sd/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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