M/S. Taher Ali Industries vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No.67/2005-(TRY)(ADK), dated 05.05.2005 passed by the Commissioner of Customs & Central Excise (Appeals), Tiruchirapalli]

M/s. TAHER ALI INDUSTRIES APPELLANT

Versus

COMMISSIONER OF CENTRAL EXCISE, TIRUCHIRAPALLI RESPONDENT

Appearance:

For the Appellant Shri Sayed Tausif Ali, Auth. Rep. Shri M. Karthikeyan, Adv. [No vakalat on file]

For the Respondent Shri K.P. Muralidharan, AC (AR)

CORAM:

Honble Shri D.N. Panda, Judicial Member

Date of hearing/decision 29-09-2015

FINAL ORDER NO.41302/2015

Assisting the appellant Shri M. Karthikeyan, learned counsel submits that the case of the appellant is that it is a manufacturer of PSC pipes and utilised the manufactured pipes for a water project of national importance. Appellant claimed exemption of duty on such pipes in terms of Notification No.6/2002, dated 01.03.2002 read with Notification No.47/2002-CE, dated 06.09.2000. When the exemption was claimed, it was the allegation of the department that the finished goods not being liable to duty, the appellant has to return back the Cenvat credit availed on inputs, work-in-progress as well as finished goods lying in stock, to the department on the date of issuance of the exemption notification.

2. It is the submission of the counsel that the notification does not require any reversal of Cenvat credit on the inputs or work-in-progress or finished goods lying in stock on the date on which exemption was granted. It is also the case of the appellant that the pipes being utilised for the purpose of water project of national importance and necessary exemption was availed producing certificate from the concerned Collector, the authority should have properly examined this issue in the light of the intention of the law relating to Cenvat credit since Rule 9 of Cenvat Credit Rules, 2002 is not at all applicable to the case of appellant following the judgment of the Hon'ble High Court of Madras in the case of Tractor and Farm Equipment Ltd. Vs Commissioner of Central Excise, Madras in CMA 940/2007 disposed on 28.11.2014. He submits that Hon'ble High Court has held in para 16 of the judgment that the Cenvat credit already utilised that cannot be called back, for no correlation established by the department to make denial.

3. Revenue on the other hand says that both the authorities passed appropriate order.

4. Heard both sides and perused the records.

5. It is certainly a fact on record that the appellant was manufacturing PSC pipes. It has not availed any exemption either on value-based or quantity-based criteria for clearance in a financial year. Therefore, this rules out applicability of Rule 9 (2) of Cenvat Credit Rules, 2002. Once the applicability of Rule 9 (2) is ruled out, there is no further case of Revenue and if unutilised credit is on record under Rule 9 (1) prior to 04.04.2002 and remaining unutilised, there is a modality prescribed by law for utilisation. The modality prescribed by Rule 9 (2) only. Once Rule 9 (2) of Cenvat Credit Rules, 2002 is not applicable even Rule 9 (1) has no significance.

6. It may be stated that relevant notification cited above, enables the appellant to get exemption. That notification did not prescribe any value-based or quantity-based exemption. There is no case of Revenue to the contrary. Therefore, Rule (2) of Rule 9 of Cenvat Credit Rules, 2004 is not applicable.

7. As stated by Shri M. Karthikeyan learned counsel, the Hon'ble High Court of Madras has passed a very elaborate judgment on Cenvat credit relating to exempted products, is appropriate to apply the law laid down therein. Also apex court in the case of Collector of Central Excise, Pune Vs Dai Ichi Karkaria Ltd. reported in 1999 (112) E.L.T.353 (S.C.) has held that validly taken Cenvat credit cannot be reverted back since such a right is indefeasible. If Cenvat credit is taken validy, which is not disputed by the department, in absence of one-to-one relationship between input or output or output service, there cannot be exercise of power by executive to ask the assessee to revert such Cenvat credit. Following this ratio, the order of authority below is set aside and appeal is allowed.

(Dictated and pronounced in open court)

(D.N. PANDA) JUDICIAL MEMBER

ksr 03-10-2015

DRAFT Remarks

I II III

Date of dictation 2.09.2015

Draft Order - Date of typing 03.10.2015

Fair Order Typing 03.10.2015

Date of number and date of dispatch 06/10/2015

3 E/00656/2005