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TMI Blog2025 (1) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, the following prayers have been made :- "A) Your Lordships be pleased to issue an appropriate writ, order or direction, including a writ in the nature of Certiorari and or any other appropriate writ order or direction, quashing and setting aside the impugned order dtd 14-12-2020 passed by the Respondent no 4 and consequentially all orders confirmed thereunder, with directions to the concerned respondents to immediately sanction and pay the rebate claims (4) with interest @ 18 from the date they were due, till final payment. B) Any other reliefs deemed fit proper & incidental in the facts of the present case may kindly be granted." 4. The brief facts of the case are as under:- 4.1 The Petitioner No. 1 is registered with the Central Excise Department vide Registration No. AAACV8091PXM001 dated 03/12/2003 and has been duly filing monthly returns ER-1 at the relevant time. The Petitioner No. 1 started its production activities in the Financial Year 2003-04. Till 08.03.2006, the Petitioner was clearing the final product i.e. Texturized yarn under exemption Notification No. 29/2004-CE and was paying central excise duty at the rate of 8% on clearance of the same. 4.2. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority, allowed the Department's revision application and set aside the order in appeal passed by the Commissioner (A) and rejected the rebate claims of the Petitioners. 5. Being aggrieved and dis-satisfied with the said order passed by the Revision authority, the present petition is preferred. 6. Learned advocate Mr. Anandodaya S. Mishra for the petitioners submitted that the impugned order and findings of the Revision authority are per se illegal, without application of mind and without considering the issue in its proper and correct perspective. The very fact that the duty for goods exported was paid from the Cenvat credit availed by the Petitioners while operating under Notification 29/2004 which would not lapse, since even when petitioners were operating simultaneously also under Notification 30/2004, which is clearly permissible to them, the Cenvat credit of duty paid under Notification 29/2004 would clearly be available for paying any duty on goods exported under Rebate and eligible to them and not lapse as being wrongly suggested by the Department. 6.1. He has further submitted that the impugned findings of the Revision authority, that the Notification 30/2004 contempla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.03.2006, the petitioners started availing the benefits of exemption Notification Nos.29/2004 and 30/2004. As on the said date i.e. 09.03.2006 the petitioners had accumulated cenral excise duty of Rs. 92,31,864/- and Education Cess of Rs. 2,76,009/-, which were duly reflected in their monthly returns i.e. ER-1. Pursuant to Central Excise Audit in December, 2006, the petitioners reversed the Cenvat credit in the following manner :- "In the closing stock of inputs lying as on 8.03.2006 at the rate of 16%, In the closing stock of finish product lying as on 8.03.2006 at the rate of 8%, In the closing stock of Yarn waste lying as on 8.03.2006 at the rate of 8%." 8.4 Further, the petitioners availed Cenvat credit on inputs purchased from 01.03.2006 to 08.03.2006. Thus, the closing balance in the month of December, 2006 which was carried forward by the petitioners till November 2009 was an amount of Rs.93,66, 762/-. Even in the subsequent Central Excise Audit for the period from 01.10.2007 to 09.10.2012, the Department did not raise any issue regarding in admissibility of Cenvat credit lying with the since 01.04.2007. 8.5 For the first time in January 2013, the Jurisdictional Range ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such inputs were used. The condition required for the same was that the credit of duty paid on inputs could have been used for discharge of duty/liability only in respect of those final products in the manufacture of which such inputs were used. Thus it was claimed that there was a nexus between the inputs and the final products. In the 1995-96 Budget, the MODVAT Scheme was liberalised/simplified and the credit earned on any input was allowed to be utilised for payment of duty on any final product manufactured within the same factory irrespective of whether such inputs were used in its manufacture or not. The experience showed that credit accrued on inputs is less than the duty liable to be paid on the final products and thus the credit of duty earned on inputs gets fully utilised and some amount has to be paid by the manufactured by way of cash. Prior to the 1995-96 Budget, the excise duty on inputs used in the manufacture of tractors and commercial vehicles varied from 15% to 25%, whereas the final products attracted excise duty of 10% or 15% only. The value addition was also not of such a magnitude that the excise duty required to be paid on final products could have exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes. It is on the basis of the earlier Scheme necessarily that the taxes have to be adjusted and payment made complete. Any manner or mode of application of the said Rule would result in affecting the rights of the assessees 6. We may look at the matter from another angle. If on the inputs, the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the Rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. 8.8 In the case of Collector Vs. Dai Ichi Karkaria Ltd. [1999 (112) ELT 353 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Indsur global Vs. Union of India reported in 2014 (310) ELT 833 (Guj.), this Court has held as under :- "34. By no stretch of imagination, the restriction imposed under sub-rule (3A) of rule 8 to the extend it requires a defaulter irrespective of its extent, nature and reason for the default to pay the excise duty without availing cenvat credit to his account can be stated to be a reasonable restriction. It leads to a situation so harsh and a position so unenviable that it would be virtually impossible for an assessee who is trapped in the whirlpool to get out of his financial difficulties. This is quite apart from being wholly reasonable, being irrational and arbitrary and therefore, violative of Article 14 of the Constitution. It prevents him from availing credit of duty already paid by him. It also is a serious affront to his right to carry on his trade or business guaranteed under Article 19 (1) (g) of the Constitution. On both the counts, therefore, that portion of sub-rule (3A) of rule must fail. 35. The situation can be looked at slightly different angle. With or without the provisions of sub-rule (3A), liability to pay interest for the default period as per sub-rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Commissioner, Central Excise, Ahmedabad -II Vs. Omkar Textile Mills Pvt. Ltd. passed in Tax Appeal No. 9 of 2008 with Tax Appeal No. 11 of 2008, holds as under:- "9. Having heard Mr.Ravani, learned Standing Counsel appearing for the Revenue and having perused the order of the authorities below including the order passed by the Tribunal in the case of S.V. Business Pvt. Ltd.,(Supra) and judgment of this Court as well as Hon'ble Supreme Court we are of the view that the issue is squarely covered by the earlier decision. This Court in the case of Dipak Vegetable Oil Industries Ltd. Vs. Union of India (Supra) had clearly held that a right, which is acquired as a result of a statutory provision cannot be taken away retrospectively unless the statutory provision so provides or by necessary implication it has the same effect. Even with regard to the proviso to Rule 3 support can be derived from the observations made by the Hon'ble Supreme Court in the case of Eicher Motors Ltd., Vs. Union of India, 1999 (106) ELT 3 (SC), the scheme sought to be introduced cannot be made applicable to the goods which had already come into existence in respect of which the earlier scheme was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the said Central Excise Act: Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the CENVAT Credit Rules, 2002" Rule 18: Rebate of Duty: Where any goods are exported, the Central Government may, by Notification, grant rebate of duty paid on such excisable goods and duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. As per para 8 of Chapter 8 of Excise Manual the following procedure is to be followed :- "8. Sanction of claim for rebate by Central Excise 8.1 The rebate claim can be sanctioned by any of the following officers of Central Excise: Deputy/Assistant Commissioner of Central Excise having jurisdiction over the factory of production of export goods or the warehouse, or Maritime Commissioner. 8.2 It shall be essential for the exporter to indicate on the A.RE. I at the time of removal of export goods the office and its complete address with which they intend to file clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export. [(3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, 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 is contained in the final product lying in stock, if 11 (3) (i).... 11 (3)(ii) the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.3.2006, the petitioners had reversed the Cenvat credit involved in the closing stock of inputs, finish product and yarn westage and balance amount of Cenvat credit was carrried forward. Thus, the petitioners had rightly carried forward its Cenvat credit balance. Further, since Rule 11 (3)(ii) of Cenvat Credit Rules, 2004 was introduced vide Notification No. 10/2007 dated 1.3.2007, and Notification No. 30/2004 does not provide that unutilized credit is prohibited from being carried forward, there could be no question of lapse of credit lying as balance in the Cenvat credit account of the petitioners in the month of April, 2007.
12 In that view of the matter, the petition succeeds and the impugned order dated 14.12.2020 passed by the respondent No. 4 is hereby quashed and set aside. Consequently the respondents are directed to sanction and pay the rebate claims noted in para 8.5 hereinabove @ 12% per annum from 10.7.2013 (date of filing the rebate claims) till the date of actual payment. The said amount shall be paid within a period of twelve weeks from the date of receipt of copy of this order. Rule is made absolute. No order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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