Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Associated Cement Company Ltd. on 18 July, 2003
Equivalent citations: 2003(89)ECC536, 2003ECR206(TRI.-CHENNAI), 2003(161)ELT973(TRI-CHENNAI)
ORDER Jeet Ram Kait, Member (T)
1. By this appeal, the Revenue challenges the Order-in-Appeal No. 127/92 dated 25.5.92 by which the Commissioner (Appeals) has set aside the order of the original authority and allowed the appeal of the party holding that there was no provision to expunge the credit rightly taken during the period when the HOPE bags were eligible inputs.
2. After hearing both the sides, the operative portion of the order rejecting, the Revenue appeal was pronounced in the open Court on 18.7.2003.
3. The brief facts of the case are that the assessee-respondents manufacture cement and they were availing modvat credit facility in respect of HDPE bags which is one of the inputs for the manufacture of the final product. The said bags became ineligible for the benefit of modvat credit with effect from 17.9.90 by Notification No. 35/90-CE (NT) dated 17.9.90. At that time the respondents had a credit balance of Rs. 2,07,932.49 in their RG 23A Part II in respect of HOPE bags received prior to 17.9.90. While the assessee have reversed the credit taken in RG 23A Part II in respect of the HOPE sacks received after the issue of notification they have not reversed the credit amounting to Rs. 2,07,932.49 which pertained to the HOPE bags lying in stock as on 17.9.90. It was in these circumstances that show cause notice was issued which culminated in the order of the original authority holding that credit of the above-noted amount is required to be expunged. On appeal, the Commissioner (Appeals) allowed the appeal of the assessee-respondents.
4. Aggrieved by the said order, the Revenue has come in appeal on the ground that when the input or the final product becomes ineligible for exemption, from that moment onwards whatever credit has been taken on the input which are used in those final products, cannot be availed. It is also stated in the grounds of appeal that if the assessee has availed credit taken on those inputs which have gone into the final products in existence after the withdrawal of the benefit, under Rule 57A the credit would be inadmissible and since the credit as such has already been utilized, the assessee will have to pay in cash.
5. Shri C Mani, learned JDR for the Revenue reiterated the grounds of appeal and prayed for allowing the Revenue appeal.
6. Shri K.R. Natarajan, learned Counsel for the respondents submitted that the order passed by the lower appellate authority is legal and proper. He submitted that here is a case where the assessee-respondents have rightfully earned the credit and they have voluntarily expunged the credit on the input viz. HOPE sacks from the date of Notification and it was in respect of the input lying in stock and on which they have earned the credit they wanted the benefit to be given to them and there is no provision to expunge the credit rightly taken at the relevant time when the inputs were eligible. He therefore, prayed for upholding the Order in appeal and rejection of the Revenue appeal.
7. I have considered the submissions made by both the sides. I find that the issue involved in this case is already covered by the judgment of the Hon'ble High Court of Punjab & Haryana in the matter of Amrit Banaspati Co, Ltd. v. UOI, 1990 (50) ELT 64 (P&H) wherein in similar circumstances, it has been held that "it would be unconscionable and unjust not to allow the petitioners to utilize the credit already earned towards the payment of the excise duty in terms of the Scheme as prevalent when the credit was earned....." The lower appellate authority while holding in favour of the assessee-respondents has relied upon the above-noted decision. Further, this Tribunal in the case of CCE v. Sunder Engineering Industries, 1991 (56) ELT 452 has held that credit already availed of in respect of utilized inputs is not to be reversed by reason of modification of order. The Larger Bench of the Tribunal in the case of CCE, Rajkot v. Ashok Iron & Steel Fabricators, 2002 (140) ELT 277 (Tri-LB) has held that Credit is not to be reversed when subsequently final product exempted from duty and credit having been taken validly and its benefit being available to manufacturer without any limitation in time, the credit is indefeasible.
8. In the instant case, as rightly held by the lower appellate authority, it is not the case of the Revenue, that the said Notification is retrospective in nature. The claim of the assessee-respondents is in respect of the credit earned by them before the issue of the Notification in question. It is also not the case of the Revenue that at the time when the assessee-respondents have taken the credit, they were ineligible for the same. There is no doubt that the balance lying in their stock as on 17.9.90, when the Notification was issued, was accrued to the assessee-respondents rightfully. In view of the above, following the ratio of the above-noted decisions, I hold that the order of the lower appellate authority is legal and proper and I uphold the same. The Revenue appeal is accordingly rejected being devoid of merits. Ordered accordingly.