GOODYEAR INDIA LTD. Vs. CCE
LAWS(CE)-2015-1-49
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 14,2015

GOODYEAR INDIA LTD. Appellant
VERSUS
CCE Respondents

JUDGEMENT

Rakesh Kumar, Member (T) - (1.)THE appellant are manufacturers of Tyres. The tyres attract only the basic excise duty and Special Excise duty and as such there is no Additional Excise Duty [Goods of Special Importance] Act, 1957 (hereinafter referred to as AED (GSI). For manufacture of tyres, the appellant procured duty paid tyre cord fabrics on which basic excise duty and AED (GSI) had been paid and took Cenvat credit of the same. During the period prior to 01/03/03, AED (GSI) credit could be utilised only for payment of AED (GSI) and could not be utilised for payment of Basic Excise Duty (BED), or Special Excise Duty (SED) or other duties of excise. Since there is no AED (GSI) on tyres, during the period prior to 01/03/03, the Tyre manufacturers had accumulated AED (GSI) credit. In the budget of 2003, by amendment to Rule 3(6) of Cenvat Credit Rules, 2002, utilisation of AED (GSI) credit for payment of basic excise duty or special excise duty on the final product, was permitted, but this provision did not specify the cut of date i.e. the AED (GSI) credit accrued upto which date prior to the date of amendment could be utilised for payment of Basic Excise Duty and Special Excise Duty. Immediately after the amendment to Rule 3(6) of the Cenvat Credit Rules, 2002 appellant utilised the AED (GSI) credit of Rs. 13.27 crores out of total AED (GSI) credit of Rs. 15.43 crores lying with them for payment of Basic Excise Duty and Special Excise Duty on the tyres. The credit utilised also included the credit of Rs. 8,71,12,812/ - which had accrued during period prior to 01/04/2000. In 2004, Section 88 of the Finance Act, 2004 amended the Rule 3(6) of the Cenvat Credit Rules, 2002, retrospectively to provide that only the AED (GSI) credit accrued after 01/4/2000 could be utilised for payment of Basic Excise Duty and Special Excise Duty on the finished products and not the credit accrued during the period prior 01/04/2000. Sub -section (4) of Section 88 provided for recovery of the pre 01/4/2000 AED (GSI) credit utilised for payment of Basic Excise duty or Special Excise duty, alongwith interest thereon under Section 11AB of the Central Excise Act, 1944. In the year 2005, Section 88 of the Finance Act, 2004 was amended by Section 124 of the Finance Act, 2005 by adding Sub -section (5) and (6) of Section 88 of the Finance Act, 2004 which provided a new mode of recovery of the AED (GSI) credit for the period prior to 01/04/2000 which had been wrongly utilised for payment of Basic Excise Duty and Special Excise Duty and as per this provision, this wrongly utilised AED (GSI) credit could be paid back by the manufacturers in 36 installments starting from July, 2005 alongwith the interest chargeable at the rate and for the period specified therein.
(2.)IN this case, as mentioned above, the Appellant immediately after amendment to Rule 3(6) of Cenvat Credit Rules, 2002 in 2003 had utilised the AED (GSI) credit of Rs. 8,71,12,812/ - which had accrued during the period prior to 01/04/2000 for the payment of Basic Excise Duty and Special Excise Duty and this utilisation became wrong utilisation in terms of the provisions of Section 88(1) of the Finance Act, 2004 and the credit became recoverable from them alongwith interest in terms of Sub -section (4) of Section 88 of the Finance Act, 2004. In view of this, the Commissioner by the impugned order -in -original No. 01/RH/Adj./2005 -06 dated 19/04/05 confirmed the AED (GSI) credit demand of Rs. 8,71,12,812/ - against the Appellant by invoking the provisions of Section 88(4) of Finance Act, 2004 and beside this, also demanded interest on this credit under Section 11AB of Central Excise Act, 1944, as Section 88(4) of Finance Act, 2004 provided for recovery of this credit in terms of Rule 12 of the Cenvat Credit Rules, 2002 which, in turn, makes the provisions of Section 11A and Section 11AB of the Central Excise Act, 1944 applicable for this purpose. Against this order of the Commissioner, this appeal has been filed.
Heard both the sides.

(3.)BOTH the sides agreed that in view of the provisions of Section 88 of the Finance Act, 2004 retrospectively amending Rule 3(6) of the Cenvat Credit Rules, 2002, the AED (GSI) credit accrued during period prior to 01/04/2000 could not be utilised for payment of Basic Excise Duty and Special Excise Duty and as such the utilisation of this credit to the extent of Rs. 8,71,12,812/ - by the appellant for payment of Basic Excise Duty and Special Excise Duty on the tyres is wrong. Both the sides also agree that the Appellant had reversed this credit in December, 2004. However, the dispute is only as to whether interest under Section 11AB as ordered by the Commissioner would be chargeable or the interest liability is to be determined in terms of Clause (V) of Section 88(4) of the Finance Act, 2004, introduced by Section 124 of the Finance Act, 2005.
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