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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 ..... e manufacture of biscuits and corrugated boxes having factory in Kutch District, Gujarat and are availing the benefit of Notification No. 39/2001-C.E., dated 31-7-2001. According to the scheme, the manufacturer is required to utilize whole of the Cenvat credit available on the last day of the month under consideration for payment of duty on goods cleared and pay the balance amount of duty in cash. The duty paid in cash is refundable and for this purpose, the Notification has two alternative procedures. The appellants have opted for self-credit procedure under clause 2A of the Notification which allows the assessee to take credit 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 paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants submitted that the total Cenvat credit available to them during the period was Rs. 2.7 crores whereas the credit utilized to pay service tax is Rs. 20.20 lakhs which was utilized by oversight and therefore, there is substantive compliance with the requirement of Notification. She has cited several cases in support of the argument. Even though the amount is small unfortunately, it cannot be said to be a mere procedural requirement but substantive requirement, which, when not fulfilled renders the appellant liable to action for taking erroneous credit of refund. As rightly observed by the lower authorities, the onus was on the appellants 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 paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of utilization of such irregular or excess credit." It is quite clear that clause 2A(g) when read together with clause 2A(e) lead to the conclusion that emerges is that the demand for irregular refund will have to be made within one year from 20th of the next month during which irregular credit was taken in respect of the clearances during the previous month. Therefore, as contended by the appellants, the demand for the month of May and July, 2005 are barred under limitation. 8. As regards the appellant's contention that they are eligible for the benefit of Notification No. 39/01-C.E. because of the payment of service tax made by them in cash 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chana Wadhwa) Member (Technical) Member (Judicial) 12. [Order per : P.G. Chacko, Member (J)].- The substantive question arising for consideration in this case is whether the benefit of Notification No. 39/2001-C.E. dated 31-7-2001 can be denied to the appellants for the months of May, July and Sept. to Dec.'05 on the ground that the relevant conditions attached to the benefit were not fulfilled by them. For a part of the said period (May and July), both the Members of the regular Bench allowed the benefit of the Notification to the assessee, albeit on different grounds. Hence the question before me as Third Member stands limited to the period Sept. to Dec.'05, for which, while the learned Member (Technical) denied the benefit to the assessee, the learned Member (Judicial) allowed it to them. However, in the peculiar nature of this case, it is necessary to state the essential facts. The above Notification was issued by the Central Government to benefit the manufacturing units located in Kutch District of Gujarat. The appellant's unit is located in that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CENVAT Credit availed of, in respect of the duty paid on the inputs used in or in relation to the manufacture of goods cleared under this notification.; (b) the credit of duty paid during the month under consideration, other than by way of utilisation of CENVAT credit under the CENVAT Credit Rules, 2002, may be taken by the manufacturer in his account current, by the seventh day of the month following the month under consideration; (c) a manufacturer who intends to avail the option under clause (a), shall exercise his option in writing for availing such option before effecting the first clearance in any financial year and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year: Provided that, for the financial year 2003-04, a manufacturer can exercise his option on or before 30th day of September, 2003. (d) the manufacturer shall submit a statement of the duty paid, other than by way of utilisation of CENVAT credit under the CENVAT Credit Rules, 2002, along with the refund amount which he has taken credit and the calculation particulars of such credit taken, to the Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd within the period stipulaled in Para 2A of the Notification. According to the above procedure, the Assistant Commissioner/Deputy Commissioner of Central Excise ought to have verified the records and to have determined the amount correctly refundable to the assessee and also to have intimated the same to them by the 15 th day of the next month vide clause (e) of para 2A ibid. This, however, was not done by the Central Excise officer. Had it been done in terms of the above procedure, the assessee could have reversed any excess amount taken as suo motu credit. From the records, it appeas that the Central Excise officer was sleeping over the matter for a long time. Ultimately on 30-6-2006, he issued a letter to the party intimating that excess amounts had been taken as suo motu credit during the months May, July and Sept. to Dec.'05 and proposing that action was liable to be taken for breach of conditions of the Notification. By the time the party received the letter, they had already paid an amount of Rs. 20,19,827/- in cash being equivalent to the total excess amount of suo motu credit for the aforesaid period. This payment had been made on 4-4-2006. Still not satisfied, the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Company Affairs contained in DOF No. 334/1/2003/TRU dated 28-2-2003. The scheme of area-specific exemption was also clarified in the said letter of the Ministry. The scheme was illustrated as under:- Illustration : Suppose duty payable on the goods was Rs. 100/- and the duty paid on inputs for the manufacture of the said goods is Rs. 20/-. What the Notification 32/99-C.E. and 33/99-C.E. envisage is that the manufacturer will utilise the full credit in respect of inputs and pay only Rs. 80/- in cash, which would be subsequently refunded to him. However, there are cases where a manufacturer did not utilise the input credit and paid the entire duty of Rs. 100/- in cash. The credit of Rs. 20/- was being kept by him in reserve to be utilised on some other goods not covered under the exemption notifications. There were also situations when the assessee was manufacturing two goods, one covered under the above notifications, and the other outside. What they were doing was to utilise the entire input tax credit for payment of duty on the product not covered under the exemption notification, and paying full duty on the exempted goods and getting back full refund. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng credit (in PLA) of the amount of duty paid in cash on the final product by the manufacturer having his factory located in Kutch District. The first leg of this procedure was for the manufacturer to take such credit at his own option during the month under consideration. This was done by the appellants within the period of 7 days prescribed in para 2A of the Notification. The manufacturer, thereupon, should intimate this fact to the proper officer of Central Excise. This was also done promptly. The next stage of the procedure was for the proper officer to conduct necessary verification and determine the amount correctly refundable to the manufacturer and intimate the same to him by the 15th day of the month following the month under consideration. This was not done by departmental officer, a fact not in dispute. According to the above procedure, where the Assistant Commissioner/Deputy Commissioner of Central Excise gives intimation, to the manufacturer, of the amount having been correctly determined, the manufacturer is liable to reverse the excess amount, if any, in their PLA. Admittedly, in this case, excess amount of duty was taken credit of in PLA over and above what was admi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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