Custom, Excise & Service Tax Tribunal
Solaris Chemtech Industries Ltd vs Rajkot on 5 September, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Excise Appeal No.629 of 2012
(Arising out of OIA-234-235/2012/COMMR-A-/RBT/RAJdated07/05/2012passed by
Commissioner of Central Excise, Customs and Service Tax-RAJKOT)
SOLARIS CHEMTECH INDUSTRIES LIMITED ........Appellant
Survey No. 164, Village-Ratadia, Near Khavda,
Taluka-Bhuj,Kutch-Gujarat
VERSUS
C.C.E. & S.T. RAJKOT .......Respondent
Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot,Gujarat-360001 WITH Excise Appeal No.630 of 2012 (Arising out of OIA-234-235/2012/COMMR-A-/RBT/RAJ dated 07/05/2012 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT) SOLARIS CHEMTECH INDUSTRIES LIMITED ........Appellant Survey No. 164, Village-Ratadia, Near Khavda, Taluka-Bhuj,Kutch-Gujarat VERSUS C.C.E. & S.T. RAJKOT .......Respondent Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-360001 APPEARANCE:
Shri. Anand Nainawati, Advocate for the Appellant Shri. Dinesh M. Prithiani, Assistant Commissioner (Authorized Representative) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No._ A/ 11080-11081 __/2022 DATE OF HEARING: 06.06.2022 DATE OF DECISION: 05.09.2022
2|Page E/629-630/2012-DB RAJU This appeal has been filed by M/s. Solaris Chemtech Industries Limited against denial of re-credit of Cenvat credit under Notification No. 39/2001-CE dated31.07.2001.
2. The appellant is engaged in the manufacture of excisable goods available under Chapter 28 and 29 of the Central Excise Tariff Act, 1995.
The appellant were located in Kutch and were availing of benefit of Notification No. 39/2001-CE dated 31.07.2001. The said Notification exempts goods specified in the first schedule of Central Excise Tariff Act, 1995, other than those specified in the Annexure to the said notification to the units located in the Kutch district of Gujarat, from so much of duty of excise or additional duty of excise leviable under thereon as is equal to the duty payable on the value addition undertaken in the manufacture of the said goods by the said unit. The exemption mentioned in the aforesaid notification was provided by way of refund of duty paid on the goods cleared through PLA(other than that paid using Cenvat). The appellant were operating under the said notification from 01.03.2008 and had given an option to take credit of the amount calculated in the manner specified in the para 2 of the notification, in his account current maintained in terms of excise manual of supplementary instruction issued by the CBEC. The credit of refund amount was also taken by the appellant in the current account. The appellant had vide letter dated 01.03.2008 exercise their option for taking credit in terms of para 2C of Notification 39/2001-CE for the year 2008-2009. The relevant extract of the notification as it exists w.e.f 01.04.2008 are reproduced below.
Exemption to exicable goods (except those specified in Annexure) cleared from units in Kutch (Gujarat). --- In exercise of the powers conferred by sub- section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub- section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40of 1978), the Central Government being satisfied that it is necessary in the public interest so to
3|Page E/629-630/2012-DB do, hereby exempts the goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) other than goods specified in the Annexure appended to this notification and cleared from a unit located in Kutch district of Gujarat from so much of the duty of excise or the additional duty of excise, as the case may be, leviable thereon under any of the said Acts as is equivalent to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit.
Provided that in the case of a unit having an original value of investment in plant and machinery installed in the factory below rupees twenty crore on the date of commencement of commercial production in that unit, the exemption contained herein shall apply only for the first clearances upto an aggregate value no exceeding twice the value of such investment from the date of commencement of commercial production, in each year.
2 The duty payable on value addition shall be equivalent to the amount calculated as a percentage of the total duty payable on the said excisable goods of the description specified in column (3) of the Table below (hereinafter referred to as the said Table) and falling within the Chapter of the said First Schedule as are given in the corresponding entry in column (2) of the said Table when manufactured starting from inputs specified in the corresponding entry in column (5) of the said Table in the same factory, at the rates specified in the corresponding entry in column (4) of the said Table:
TABLE S. Chapter of the Description of goods Rate Description of inputs for No. First Schedule manufacture of goods in column (3) (1) (2) (3) (4) (5)
1. 29 All goods 29 Any goods
2. 30 All goods 56 Any goods
3. 33 All goods 56 Any goods
4. 34 All goods 38 Any goods
5. 38 All goods 34 Any goods
6. 39 All goods 26 Any goods
7. 40 Tyres, tubes and flaps 41 Any goods
8. 72 or 73 All goods 39 Any goods, other than iron ore
9. 74 All goods 15 Any goods
10. 76 All goods 36 Any goods
11. 85 Electric motors and 31 Any goods generators, electric generating sets and parts thereof
12. 25 Cement 75 Lime stone and gypsum 12A. 25 Cement clinker 75 Lime stone
13. 17 or 35 Modified starch or glucose 75 Maize, maize starch or tapioca starch
14. 18 Cocoa butter or powder 75 Cocoa beans
15. 72 or 73 Iron and steel products 75 Iron ore 15A. 29 or 38 Fatty acids or Glycerine 75 Crude palm kernel, coconut, mustard or rapseed oil 15B. 72 Ferro alloys, namely, ferro 75 Chrome ore or manganese ore chrome, ferro manganese or silico manganese
16. Any chapter Goods other than those 36 Any goods mentioned above in S. Nos.
1 to 15 Provided that where the duty payable on value addition exceeds the duty paid by the manufacturer on the said excisable goods, other than the amount paid by utilization of CENVAT credit during the month, the duty payable on value addition, shall be deemed to be equal to the duty so paid other than by CENVAT credit.
2A In cases where all the goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall be subject to the condition that the manufacturer first utilizes whole of the
4|Page E/629-630/2012-DB CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash.
2B The exemption contained in this notification shall be given effect to in the following manner, namely:-
(a) the manufacturer shall submit a statement of the total duty paid and that paid by utilization of CENVAT credit, on each category of goods specified in the said Table and cleared under this notification, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 7th of the next month in which the duty has been paid;
(b) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after such verification as may be deemed necessary, shall refund the duty payable on value addition, computed in the manner as specified in paragraph 2 to the manufacturer by the 15th of the month following the one in which the statement as at clause (a) above has been submitted.
2C Notwithstanding anything contained in sub-paragraph 2B above,-
(a) the manufacturer at his own option, may take credit of the amount calculated in the manner specified in paragraph 2 in his account current, maintained in terms of the Excise Manual of Supplementary Instructions issued by the Central Board of Excise and Customs. Such amount credited in the account current may be utilized by the manufacturer for payment of duty, in the manner specified under rule 8 of the Central Excise Rules, 2004, in subsequent months, and such payment shall be deemed to be payment in cash;
(b) the credit of the refund amount may be taken by the manufacturer in his account current, by the 7th 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;
(d) the manufacturer shall submit a statement of the total duty payable as well as the duty paid by utilization of CENVAT credit or otherwise and the credit taken as per clause (a), on each category of goods manufactured and cleared under the notification and specified in the said Table, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 15th of the month in which the credit has been so taken;
(e) The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed necessary, shall determine the amount correctly refundable to the manufacturer and intimate to the manufacturer by the 15th day of the next month to the month in which the statement under clause (d) has been submitted. In case the credit taken by the manufacturer is in excess of the amount determined, the manufacturer shall, within five days from the receipt of the intimation, reverse the said excess credit from the account current maintained by him. In case, the credit taken by the manufacturer is less than the amount of refund determined, the manufacturer shall be eligible to take credit of the balance amount;
(f) in case the manufacturer fails to comply with the provisions of clauses (a) to
(e), he shall forfeit the option, to take credit of the amount calculated in the manner specified in sub-paragraph 2A in his account current on his own, as provided for in clauses (a) to (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 therein, 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 shall be considered to have been cleared without payment of duty to the extent of utilisation of such irregular or excess credit.
5|Page E/629-630/2012-DB Explanation.-For the purposes of this paragraph, 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, 2004.
2.1 The appellant was filing re-credit claims on a monthly basis and the same were allowed for the period April, 2008 to February, 2010.The appellants' claim filed for the month of April, 2008 to March, 2009 were rejected vide order No. 482-504/2009-10 dated 12.03.2010 by the Deputy Commissioner. The following was mentioned as the grounds for rejection.
In terms of Para 2C(c) of the Notification, the claimant has exercised his option vide letter dated 05.03.2008 for the financial year 2008-2009 & dated 12.03.2009 for the financial year 2009-2010 for availing the facility of Re-credit as available under Para 2C(a) of the Notification.
The claimant has filed re-credit applications for period from April 2008 to February 2010 [both months inclusive] as per the details given below:
Re-Credit Claim Month Date of Amount of & Year filing of claim claim 04/2008 06.05.2008 1270359 05/2008 06.06.2008 1875543 06/2008 07.07.2008 2058792 07/2008 06.08.2008 1742986 08/2008 05.09.2008 1814293 09/2008 07.10.2008 1625153 10/2008 06.11.2008 1095290 11/2008 05.12.2008 1703034 12/2008 07.01.2008 1029902 01/2009 06.02.2009 898835 02/2009 09.03.2009 947884 03/2009 09.04.2009 961209 04/2009 06.05.2009 867670 05/2009 09.06.2009 1177172 06/2009 07.07.2009 1491401 07/2009 07.08.2009 1322942 08/2009 10.09.2009 1367953 09/2009 12.10.2009 1235610 10/2009 09.11.2009 1155716 11/2009 14.12.2009 754849 12/2009 15.01.2009 1040041 01/2010 11.02.2010 947884 02/2010 10.03.2010 859572 TOTAL 29246090 In support of the claim, the claimant has submitted copies of [1] ER-1 return [2] Personal Ledger Account for the period from April 2008 to February 2010 [both months inclusive].
I find that Para 2A of Notification No. 39/2001-CE dtd. 31.07.2001 stipulates that "In cases where all the goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall
6|Page E/629-630/2012-DB be subject to the condition that the manufacturer first utilizes whole of the CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash" accordingly, the claimant has first to avail CENVAT credit and to exhaust the it for the payment and then to pay the duty from the PLA and has to clear, the Re-credit for the payment of duty paid from PLA only.
However, in the instant cases, I find that the claimant has not availed the CENVAT credit and have not thereby utilized the whole of the amount of CENVAT credit available for payment of Central Excise Duty first but have paid the entire amount of Central Excise Duty from the PLA and have claimed Re- credit for that amount.
In a similar case of M/s. Sumilon India Ltd., Varsana (Kutch), wherein the assessee had not taken the CENVAT credit of the CVD paid by them on import of the Poly Cold Machine (capital goods) and contended that as they are claiming depreciation on full value of machinery, they have not taken CENVAT credit. This office deducted the amount equivalent to the amount of CVD paid by them from their re-credit claim and the same was upheld by the Commissioner (Appeals), Customs & Central Excise, Rajkot vide OIA No. 24/2010/COMMR(A)/RAJ dtd. 11.01.2010.
In view of above, it is amply clear that the claimant has violated the provisions of Para 2A of Notification No. 39/2001-CE dtd. 31.07.2001 and have irregularly claimed the re-credit which is bad in law and is liable for rejection.
Accordingly. I reject the re-credit claims for the entire amount of Rs. 2,92,46,090/ (Two Crore Ninety Two Lacs Forty Six Thousand Ninety Only) for the months of April 2008 to February 2010 claimed irregularly by the assessee and direct the assessee to reverse the re credit taken for the months of April 2008 to February 2010 along with the interest at the applicable rate and for the applicable time. As laid down in Para 2C(e) of the Notification No. 39/2001-CE dated 31.7.2001 as amended, irregular credit taken is to be reversed within 5 days from the date of this communication, otherwise, the said irregular credit shall become recoverable under Section 11 of the Central Excise Act, 1944 read with sub Para (g) of Para 2C of Notification No. 39/2001-CE dated 31.7.2001 as amended, which stipulates that "in case such irregular or excess credit is utilised for payment of excise duty on clearances of excisable goods, the said goods shall be considered to have been cleared without payment of duty to the extent of utilisation of such irregular or excess credit".
From the above it is apparent that since the appellant was not availing Cenvat Credit. It was held that the appellant had violated the condition given in para 2A of Notification No. 39/2001-CE which mandates that the manufacturer has to first utilize whole amount of Cenvat Credit available to him on the last day of the month under consideration for payment of duty of goods cleared during such month and pays only the balance amount in cash. In the instant case, since no amount of Cenvat Credit was availed, it was held that the appellant has not utilized the Cenvat Credit available to him for payment of duty first and since the appellant has paid the entire amount of duty under PLA the
7|Page E/629-630/2012-DB appellant has violated the condition prescribed under in para 2A of Notification No. 39/2001-CE dated 31.07.2001.
3. The order of the Deputy Commissioner was passed without issuing any Show Cause Notice and without granting any hearing to the appellant. The said order of Deputy Commissioner was challenged before Commissioner (Appeals) who vide order No. 482-504/2009-10 dated 14.03.2010 rejected the appeal filed by the appellant. The appellant challenged the same before Tribunal, who vide order No. A/1704- 1705/WZB/AHD/2011, dated 28.09.2011 set aside the order of Commissioner (Appeals) and remanded the matter for fresh decision to Commissioner (Appeals) with the following observations:
"3. The issue in this case is regarding benefit of Notification No.39/2001-CE, dated.31.7.2001, which contemplates of allowing re credit to the assessees, who are situated in Kutch area, subject to condition that they utilized the entire CENVAT Credit taken by them and pay balance amount through account current and such amount which have been paid through PLA are permitted to be re-credited. Both the lower authorities are of the view that the appellant has not taken credit on the input which has been a violation of provisions. In our considered view, the benefit of availlment of CENVAT Credit under CENVAT Credit Rules, 2004 seems to be optional and not compulsory which was not considered by lower authorities in proper perspective. In view of this, we set aside the impugned order, without expressing any opinion on merits of the case, keeping all the issues open, and remand the matter back to Commissioner (Appeals) to reconsider the issue fresh without issuing for amount as pre-deposit and come to a conclusion after following the principles of natural justice."
4. The matter was again decided by Commissioner (Appeals) vide order No. 234 to 235/2012/Commissioner(A)/RBT/RAJ dated 07.05.2012, the Commissioner (Appeals) again rejected the claim of the appellant with the following observations:
8. I have carefully gone through the facts of the case, Impugned order and order of the hon'ble CESTAT allowing the appeals of the appellant by way of remand, appeal memorandum and submissions made by the appellant at the time of personal hearing. I find that the issue to be decided in the present appeal is whether not taking credit on the inputs is violation of provisions for taking benefit of notification no. 39/2001-CE dated 31.07.2001 or otherwise. In view of the hon'ble CESTAT order remanding the case back to reconsider the Issue afresh without insisting for pre-deposit, I proceed to decide the appeals on merits.
8|Page E/629-630/2012-DB
9. The para 2-A of the Notification 39/2001, as amendedreads as under:
"2A In cases where all the goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall be subject to the condition that the manufacturer first utilises whole of the CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash."
9.2 It is noticed that the appellants have not availed / utilized the Cenvat credit on the respective inputs which becomes mandatory on their part once they opt to avail special area based exemption under the Notification No. 39/2001, as amended, as per para 2A of the said Notification.
10. I find that the appellant has not followed the basic condition of the notification no. 39/2001-C dated 11.07.2001. Para 2A of the said notification envisages the availability of exemption to the manufacturer only if whole of the Cevat credit available is availed and utilized on the last day of the month under consideration for payment of duty on goods cleared. And only after utilization of the Cevat the manufacturer becomes entitled for payment of balance amount of duty in cash. As the Cenvat credit in question was always available to the appellant which they did not utilized intentionally, I find it is clear violation of provisions for taking benefit of notification no. 39/2001-CE dated 31.07.2001.
10.2It is settled law that in order to claim benefit of a notification, the terms of the notification must strictly comply with Especially for availing benefits under an exemption notification, the conditions have to be strictly complied with. The conditions of the notification have to be fully followed as held in plethora of cases some of which are given below:
i) CCE, Chandigarh-1 Vs Mahaan Diaries-2004(166) ELT 23 (SC)
ii) Eagle Flask Inds. Ltd., Vs CCE, Pune-2004 (171) ELT 0296 (S.C.)
iii) Wipro Ltd., Vs UOI-1997 (94) ELT 470 (S.C.)
11. The appellant has argued that they have well intimated to the department every year since inception that they are not availing the cenvat credit on their inputs. It is their contention that the department has also accepted the contention and had passed their earlier claims related to last three years period. In this regard I find that whether to avail notification no. 39/2001 or not was optional for the appellant. however once they opted for the said notification it was mandatory for them to follow the conditions strictly. The manufacturer was required to first utilize whole of the CENVAT credit available to him. This was not an empty formality. It is the foundation for availing the benefits under the said notification. It cannot be said that they are mere proceduralrequirements, with no consequences attached for non-observance. The consequences are denial of benefits under the notification. For availing benefits under an exemption notification, the conditions have to be strictly complied with. Therefore, the lower authority endorsed the view that the exemption under notification no.39/2001 was not available to the appellants. On the facts found, the view is on terra firma.
9|Page E/629-630/2012-DB From the above discussion, it is apparent that the entire dispute hinges on the following question:-
"Whether the cenvat credit which could have been taken by a manufacturer, but not taken voluntarily, can be called credit available to him"?
Para 2A of Notification reads as under:-
"2A In cases where all the goods produced by a manufacturer are eligible for exemption under this Notification, the exemption contained in this Notification shall be subject to the condition that the manufacturer first utilizes whole of the CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash."
5. The claim of the appellant is that if they by choice have not availed cenvat credit, then no credit is "available" to the appellant, and therefore, they have complied with the restriction imposed in para 2A of the Notification 39/2001-CE. The claim of the Revenue is that if the appellant could have availed credit and have chosen not to avail the credit then the credit that appellant could have availed is to be treated as credit available to the appellant and since the appellant failed to use the credit available to the appellant, they have violated the condition prescribed in para 2A of Notification 39/2001-CE.
6. The notification 39/2001was introduced in order to promote the industry in disaster affected region of Kutch as a relief. The idea was to grant the special incentives to industriesso that they set up plants in the said region and generate employment etc.TheExemption Notification was carefully drafted and it was extended to all but a few items. The Notification also puts certain restrictions on the inputs that could be used for the said purpose as is apparent from the table in para 2A of the Notification 39/2001-CE.
10 | P a g e E/629-630/2012-
DB
Sr. Chapter of the Description of goods Rate Description of inputs for
No. First Schedule manufacture of goods in
column (3)
(1) (2) (3) (4) (5)
1. 29 All goods 29 Any goods
2. 30 All goods 56 Any goods
3. 33 All goods 56 Any goods
4. 34 All goods 38 Any goods
5. 38 All goods 34 Any goods
6. 39 All goods 26 Any goods
7. 40 Tyres, tubes and flaps 41 Any goods
8. 72 or 73 All goods 39 Any goods, other than iron ore
9. 74 All goods 15 Any goods
10. 76 All goods 36 Any goods
11. 85 Electric motors and 31 Any goods
generators, electric
generating sets and parts
thereof
12. 25 Cement 75 Lime stone and gypsum
12A. 25 Cement clinker 75 Lime stone
13. 17 or 35 Modified starch or glucose 75 Maize, maize starch or tapioca
starch
14. 18 Cocoa butter or powder 75 Cocoa beans
15. 72 or 73 Iron and steel products 75 Iron ore
15A. 29 or 38 Fatty acids or Glycerine 75 Crude palm kernel, coconut,
mustard or rapseed oil
15B. 72 Ferro alloys, namely, ferro 75 Chrome ore or manganese ore
chrome, ferro manganese or
silico manganese
16. Any chapter Goods other than those 36 Any goods
mentioned above in S. Nos.
1 to 15
6.1 Learned counsel for the appellant pointed out that non availment of
Cenvat Credit has not made any difference in quantum of refund admissible in terms of Notification No.39/2001-CE. He pointed out that quantum of refund admissible to the appellant in either circumstance. It has been asserted that if appellant takes the credit that the appellant could have possibly availed the quantum of refund admissible to the appellant remains the same as in case the appellant does not avail the credit. In their submissions dated 24th June, 2022, the appellant has given the following calculations:-
What if Period CENVAT PLA Total Eligibility Exemption Scenario Credit as per Availed in Duty availed value both addition scenarios rate Present April 2008 0.00 Rs.8.48 Rs.8.48 Rs.2.92 Rs.2.92 Scenario to (CENVAT February
11 | P a g e E/629-630/2012-
DB Credit Not 2010 availed by the appellant) CENVAT April 2008 Rs.0.38 Rs.8.10 Rs.8.48 Rs.2.92 Rs.2.92 Credit has to to be February considered 2010
The Above calculation has not been countered or challanged by the Revenue. It is apparent from the above calculation that the fact of taking, or not taking, the credit has not made any difference in the quantum of refund admissible to the appellant. This is so because the notification limits the credit available to the appellant to a percentage of the value addition specified in the Column (4) of the said Table in the Notification No.39/2001-CE.From the above, it is apparent that there is no extra refund admissible to the appellant on account of non availment of Cenvat credit. In fact, the appellant haspaid that much more duty in cash.
6.2 Learned counsel for the appellant has argued that there is no statutory stipulation that assessee has to mandatorily availed Cenvat credit on capital goods and inputs if they wish to avail the benefit of Notification No.39/2001-CE. Learned counsel argued that the notification merely required the appellant to avail the Cenvat credit "available before paying any duty in cash". It has been argued by the Learned Counsel that if no credit is availed by them then no credit is available to them for use. Learned Counsel further pointed out that DOF letter of CBEC dated 04.06.2009 which has clarified the phrase "Whole of the credit available" in respect of notification no.39/2001-CE. Learned counsel relied on the following extract of the said letter reads as under:-
"2.The matter had been examined in consultation with TRU. Since CENVAT Credit rules do not prescribe a time limit for carrying forward the Cenvat Credit, a manufacturer can retain the unutilized credit in his books indefinitely till the end of tax holiday and utilized the same for payment of duty thereafter resulting in the manufacturer getting a much larger benefit than envisaged. It was to prevent this loophole from being exploited that the notification was modified prescribing full utilization of Cenvat Credit available before making any payment in cash.
3. The intention for prescribing the said condition has been explained in para 2 above. Therefore, rejection of the entire 12 | P a g e E/629-630/2012- DB refund claim in such a situation was not warranted or intended. Therefore it has been decided that in cases when Cenvat credit is not taken / utilized on few invoices, the practice followed so far which is given in para 1 maybe continued. However in such cases the Cenvat credit should begot reversed. The clarification is issued only with respect to the peculiar facts of the cases and should not be used for interpretation of any other notifications. Field formation are also advised that units where exemption are coming to end, refund application may be verified carefully to ensure that no Cenvat credit has been remained to be taken and verified by them".
7. It is apparent that the reason for introducing the restriction of full utilization of credit available is that the assessee does not misuse the exemption by taking credit and not using the same. Thereby, accumulating the credit and using it on a letter date when they get out of the notification no.39/2001-CE. It is seen that if the appellant does not take any credit then no such mal-practice can happen and no credit can be accumulated. Moreover, it also implies that the credit "available" would mean the Cenvat credit taken and available in the credit of Cenvat account and not the credit that the appellant could have possibly taken but did not avail. Moreover, in the instant case, since by not taking the credit the quantum of refund admissible to the appellant remains as same as it would have had the appellant taken the credit and utilized the same. In this background, we find rejection of rebate claim on this ground is without any basis.
8. The appeals are consequently allowed.
(Pronounced in the open court on 05.09.2022) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Prachi