PEARL DRINKS LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The facts leading to the filing of the present appeal may be recapitulated in brief. These are as under:

(2.) The appellants were purchasing sugar from two First Stage Dealers, viz., (1) Rajputana Store Pvt. Ltd., Delhi and (2) Bajaji Sugar Co. Delhi who were issuing invoices to the appellants showing the element of BED paid on sugar sold to the appellants and were not showing any element of AED (Additional Excise Duty) as no AED was leviable on final products for the purpose of taking Cenvat credit. No credit of AED could be taken and utilized by the appellants prior to 01.03.2000 because credit of AED paid on an input could be utilized towards payment of AED only leviable on a final product. Therefore, prior to 01.03.2003, invoices issued by first stage dealer did not show the element of AED paid on sugar sold by them to the appellants. There was no statutory liability on first stage dealers to show elements of various duties paid on goods sold by them. It is appropriate to mention here that the records of first stage dealers are subject to check by Central Excise Officers and a periodical return is also submitted by first stage dealers to Central Excise Range Office. This is the factual scenario in which the invoices issued by first stage dealers during the relevant period 01.04.2000 to 09.10.2000 to the appellant are to be understood. With effect from 01.03.2003, an amendment was made in Cenvat Credit Rules, 2002 that credit of AED paid on input can be utilized towards payment of BED and special excise duty as well leviable on a final product. Further, by a Circular dated 06.03.2003, it was also clarified that any credit of AED accruing prior to 01.03.2003 to a manufacturer could also be utilized towards payment of BED and SED as well on final product. Above Circular dated 06.03.2003 was given a statutory backing by Clause 78 of Finance (No. 2) Bill, 2004 (enacted as Z 88 under Finance (No. 2) Act, 2004).

(3.) The appellants claimed Cenvat credit of AED (GSI) to the tune of 9,20,944 paid on sugar accruing during the period 01.04.2000 to 09.10.2000. However on 05.07.2005, a show cause notice was issued to the appellants proposing to withdraw the said credit. The appellants filed reply to the said show cause notice and also gave its written submission. Order-in-Original dated 20.10.2005 was passed by the Joint Commissioner confirming the demand of duty of 9,20,944 and penalty of equal amount was also imposed. The appellants preferred appeal thereagainst before the CIT(A), which was dismissed. Further appeal was preferred before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') and met the same fate. It is in these circumstances, the instant appeal is filed, which is admitted on the following question of law: