Customs, Excise and Gold Tribunal - Delhi
Cce vs Malwa Industries Ltd. on 17 February, 2004
Equivalent citations: 2004(95)ECC622, 2004(171)ELT67(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In these two appeals, filed by the Revenue, the issue involved is whether Cenvat Credit can be used for payment of Additional Excise duty.
2. Shri D.N. Choudhary, learned SDR, alongwith Shri Vikas Kumar, learned SDR, submitted that the respondents,. Malwa Industries Ltd., manufacture cotton yarn and cotton denim fabrics, which are chargeable to duty of excise under Section 3 of the Central Excise Act and Additional Duty of Excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957; that the respondents are availing the facility of Cenvat Credit; that the respondents had utilised Cenvat Credit for payment of Additional Excise duty, that the Cenvat Credit could be used only for payment of Basic Excise Duty and Special Excise Duty; that the Commissioner, under both the impugned orders, has held that the Cenvat Credit may be utilised for payment of any duty of excise, which is not correct; that Rule 57AB(1)(b) provides that Cenvat Credit can be used for payment of any duty of excise; that Rule 2(7) of Central Excise Rules, 1944 and Section 2A of the Central Excise Act defines duty of excise to mean the duty leviable under Section 3 of the Act, which in turn, defines the term to mean the duty leviable n terms of the first and second Schedules to the Central Excise Tariff Act; that thus, as per the statutory definition, the Additional Excise Duty is not included in the expression 'Duty of Excise" and, therefore, the utilisation of the Cenvat Credit for payment of Additional Excise Duty is without any authority. The learned SDR, further, mentioned that the reliance of the Commissioner on Board's F. No. 345/8/2000 TRU dated 14.12.2000 is of no help to the respondents as the same is not conclusive; that in response to a reference, the Board under letter dated 20,6.02, desired that the matter may be got examined further; that in the case of CCE, Chandigarh v. Gontermann Peipers (I) Ltd., (Final Order No. A/253-254/2002-NB(DB) dated 18.2.2002), it has been held by the Tribunal that credit of Basic Excise Duty cannot be utilised for payment of Additional Excise duty.
3. Countering the arguments, Shri M. Chandersekharan, learned Sr. Advocate, submitted that Board's letter dated 14.12.2000 has specifically clarified that the credit in respect of Basic Excise Duty paid on any inputs or capital goods, can be utilised for payment of duty on the final product under the Additional Excise Duty (T&TA) Act as well as AED (GSI) Act; that this letter has so far not been withdrawn by the Board; that in Gontermann Peipers (I) Ltd. case (supra), the Tribunal has observed that these instructions were made for Cenvat and not meant for interpreting Sub-rule (2) of Rule 57 or Clause (2) of Notification No. 21/1999; that in the present matter, whatsoever, under consideration is Cenvat and, therefore, the decision in case of Gontermann Peipers (I) Ltd. (supra) is not applicable to the facts of the present matters. He also relied upon the Tribunal's decision in the case of Girdharilal Sugar and Allied Industries v. CCE, 2002 (148) ELT 406 (T), wherein it has been held that in absence of any restriction on the use of specified duty paid on capital goods, the Revenue cannot claim that the credit of the Basic Excise Duty paid on capital goods, cannot be utilised for payment of Additional Excise Duty. In reply, Shri D.N. Choudhary, learned SDR, relied upon the decision in the case of Commissioner of Income-tax v. Ghaswala, 2002 (1) SCC 633 (SC) wherein it has been held that the Supreme Court that "every clarificatory note or press release issued by the Board does not have the statutory force like the circulars issued by the Board under Section 119 of the Act. It is only those circulars issued by the Board under the provisions of Section 119 of the Act, will have a statutory force and will be binding on every Income-Tax authority".
4. We have considered the submissions of both the sides. Rule 57AB(1) of the Central Excise Rules, 1944, empowers a manufacturer of final products to take credit (hereinafter referred to as the Cenvat Credit) of the duties specified in sub-rule paid on any inputs of capital goods. Further, Rule 57AB (IB) provides that Cenvat credit may be utilised for payment of any duty of excise on any final products manufactured by the manufacturer or for payment of duty on inputs or capital goods themselves if such inputs are removed as such or after partially processed or such capital goods are removed as such. The said Sub-rule provides for the utilisation of the Cenvat Credit for payment of "any duty of excise" and not "duty of excise". Section 2A of the Central Excise Act only refers to "duty", "duties", "Duty of Excise" and "Duties of Excise" and these expressions shall be construed to include a reference to Central Value Added Tax. We, therefore, observe that Rule 2(7) of the Central Excise Rules, 1944, defines only duty to mean duty payable under Section 3 or Section 3A of the Central Excise Act. This Sub-rule also does not define the expression "any duty of excise" which is mentioned in Sub-rule (IB) of Rule 57 AB (1). The Additional Duties of Excises, which is levied and collected under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 are also Duties of Excise and these will be covered by the expression "any Duty of Excise" used in Sub-Rule (1B) of Rule 57AB(1). We, further, observe that as per Section 2(a) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the Additional Duties means the Duties of Excise levied and collected under Sub-section (1) of Section 3. This leaves no doubt in our mind that the Cenvat Credit can be utilised for making payment of Additional Excise Duty levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Sub-Rule (2B) of Rule 57AB only places restrictions on the use of credit in respect of Additional Duty of Excise as it provides that the credit of these duties can be utilised only towards the payment of duty of excise leviable under the Additional Duties of Excise (Textile and Textile Articles) Act or under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. There is no condition specified in Rule 57AB, which provides that Basic Excise Duty or Special Excise Duty cannot be used for payment of Additional Duty of Excise leviable under any of these Acts. This is what was clarified by the Board under letter dated 14.12.2000 in the following manner:
"As under the old Rule so under the new Rule as well the credit in respect of BED paid on any inputs or goods, can be utilised for payment of Additional Duty on the final product under the AED (T&TA) Act as well as AED (GSI) Act. However, credit of AED Act cannot be utilised for payment of BED on the final product. To sum up, the Cenvat Rules provide that utilisation of credit in respect of BED for payment of Additional Duty under AED (T&TA) or AED (GSI) of the final product...,.."
5. The Sr. Counsel has rightly emphasised that the Tribunal specifically mentioned in Gontertnann Peipers (I) Ltd. case (supra) that the decision was delivered in respect of interpretation of Sub-Rule (2) of Rule 57 or Clause (2) of Notification No. 21/99 and not Cenvat Credit involved in the present appeals. We, therefore, do not find any reason to interfere with the impugned orders and reject both the appeals of the Revenue.