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TMI Blog2003 (11) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to 31-3-1999, they took Modvat credit of additional excise duty (AED) paid on grey tyre cord fabric. Since the final product TCWS did not attract any levy of AED, in terms of Notification 11/98, dated 2-6-98, the department was of the view that taking credit of AED on the input - unprocessed fabric was not correct and accordingly show causes were issued denying the credit and after considering the reply furnished by the appellants, and after granting personal hearing, the lower authority confirmed the demands and directed the appellant to expunge the credit. The appellants thereupon reversed the credit. Aggrieved by the said order, they have filed appeal before the Commissioner (Appeals) and the Commissioner (Appeals) by the orders impugned rejected the appeals and hence these appeals before the Tribunal. 3. Shri S. Ignatius, learned Counsel for the appellant submitted that in terms of Notification No. 5/94-C.E. (NT), dated 1-3-94 credit of AED paid on the inputs viz. grey tyre cord warp sheet can be utilised only for the purpose of paying additional excise duty on finished products and there was no additional excise duty (AED) payable on the finished product viz. tyres. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y final product. (4) Madura Coats Ltd. v. CCE, reported in 2001 (44) RLT 191 wherein it was held that credit of additional excise duty taken can be utilised for payment of Basic Excise duty. (5) Beaver Automotive Pvt. Ltd. v. CCE, reported in 2002 (82) ECC 621 wherein it was held that AED availed on input can be utilised for payment of BED. (6) CCE, Vadodara v. Steelco Gujarat Ltd., reported in 2000 (121) E.L.T. 557 wherein it has been held that goods in respect of which input credit has been taken when cleared under Chapter X Procedure to a manufacturer of export goods cannot be treated as goods exempt from the whole of duty of excise or as a goods chargeable to nil rate of duty within the Rule 55CC(1) of the Central Excise Rules, 1944. The learned Counsel also submitted that the issue involved in both the appeals are common except that in respect of Appeal No. E/1243/2000 the lower authority while disallowing the total credit of Rs. 1,07,62,274/- has also rejected refund claims for Rs. l,03,44,44,539/- being the AED credit contained in tyres exported under bond. He has also submitted that the contention of the Revenue that in view of Notification No. 11/98-C.E., dated 2-6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs used in the manufacture and export of ready-made garments. Moreover as per Para 2 of the Board's Circular, it is categorically stated that Notification No. 13/2003 has removed the restriction of utilisation of credit on AED (GSI) and hence refund of unutilised credit is admissible. This circular appears to be in the context of garments. In terms of Notification No. 5/94 the restriction fur utilisation of AED credit was applicable to the assessee at the relevant time. (e) In the instant case the issue is not as to whether AED credit can be utilised for payment of other duties, but AED credit can be refunded when the assessee was not eligible to avail AED credit. (f) In the case of CCE v. Gontermann Piepers (I) Ltd., reported in 2002 (147) E.L.T. 2000, the Tribunal while referring to Notification No. 5/94 has observed that credit of AED can be utilised for purpose of paying AED which means credit of BED cannot be utililsed for payment of AED. (g) As mentioned in Circular No. 751/67/2003-CX., dated 30-9-2003, the Board has now referred the matter to the Ministry of Law for their opinion as to whether credit of AED (GSI) accumulated prior to 1-3-2003 can be utilised for paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (GSI) are so integrally connected with each other in law, that deposits made against one can be considered towards adjustment to liability against the other on a request being made by the assessee, so that the assessee necessarily does not have to resort to the procedure of obtaining refund on one hand and paying exactly the same amount again to Government on the other hand. We find that the quantum sought for adjustment, that is Rs. 23,51,200/- is not disputed by either side. It is also not disputed that the assessment of the fabrics would correctly attract duty under Chapter 59 as Basic Excise Duty at 15% ad valorem. It is also not disputed that the differential amount of Rs. 11,75,601/- has already been paid under the head Basic Excise duty. The only issue under dispute is whether the amount of Rs. 23,51,200/- erroneously paid by the appellant as Additional Duty of Excise (GSI) can in fact be deemed to be paid as Basic Excise Duty and the matter regularised. On a careful consideration we find that it is also not disputed that both the duties are collected under Section 3 of the Central Excise Act though the levy or imposition of the Additional Excise Duty is under the statute o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or payment of Cenvat duty. We, further, note that vide Explanation to Notification 13/2003-C.E. (N.T.), dated 1st March, 2003, the Board has clarified that credit of AED leviable under Section 3 of the AED (GSI) Act, 1957 may be utilised towards payment of duty of excise (BED). 6. Coming to the plea of the learned SDR that the Board's Circular No. 701/17/2003, dated 12-3-2003 appears to be issued in the context of garments, we have gone through the Circular and we find that the said Circular has also referred to Notification No. 13/2003-C.E. (N.T.), dated 1st March, 2003 by which it has already been clarified that credit of AED leviable under Section 3 of the AED (GSI) may be utilised towards payment of BED. Further, the said Circular vide Para 3 has also clarified that refund of AED shall be allowed under Cenvat Rules, 2002 regardless of the fact that the said duty is not leviable on the finished product. Therefore, the plea of the learned SDR has no merits. The final product of the appellants is tyres which is cleared on payment of duty. Rule 57C envisages, denial of Modvat credit in case the final product is exempted. The case law in the matter of CCE, Chandigarah v. Gonterman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not suffered duty, and have been received with proper documents. The contention of the assessee that the refund claimed amounting to Rs. 1,03,44,539/- is for the AED credit contained in the tyres exported under bond is also not controverted by the department. Further, C.B.E. C. Circular No. 701/17/2003-CX., dated 12-3-2003 has vide Para 3 has also clarified that refund of AED (GSI) shall be allowed under Rule 5 of the Cenvat Rules 2002, regardless of the fact that the said duty is not leviable on the finished product. The Department's contention is that the assessee is not eligible for the credit of AED and when they are not entitled to the credit, the question of refund does not arise. We have held above, that the assessee is entitled to take credit of AED paid on the inputs which have admittedly suffered duty and were received with proper documents. Therefore, the contention of the department that they are not eligible to utilise such credit cannot be accepted. In view of our above discussion, we hold that the appellants are entitled to the refund as claimed and the rejection of the refund was not legal and proper. We, therefore, order refund of the claims for Rs. 1,03,44, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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