VINY ROYAL PLASTICOATES PVT. LTD. Vs. CC

JUDGEMENT

(1.) AS per facts on record the appellant is engaged in the manufacture of leather cloth. For the said purpose they purchased polyester/cotton yarn from the market on which basic duty under additional excise (Textile and Textile Article) [hereinafter referred to as AED (T & TA)] stands paid. After manufacturing fabrics from the said yarn, the same are further converted into leather cloth. The said leather cloth cleared by the appellant does not attract any duty under AED (T & TA) but they are required to pay basic duty as also Additional Excise Duty (Goods of Special Importance) Act [referred to as AED (GSI)]. They used the modvat credit of AED (T & TA) to discharge their obligation of AED (GSI). This was objected to by the Revenue and proceedings were initiated against them for denial of credit, by way of issuance of two show cause notices dated 02.08.99 and 13.01.02. The said show cause notices were adjudicated by the Deputy Commissioner, Central Excise, Vadodara vide his order dated 28.09.2000. Vide the said order the Deputy Commissioner observed that the credit of AED (T & TA) has been taken legally by the assessee and as such show cause notices proposing denial of the same were dropped. However it was observed in the said order of the Deputy Commissioner that the credit so availed by the appellant can be used only for payment of AED (T & TA). He also observed that as there is no AED (T & TA) on leather cloth, they can surely utilize the said credit for clearance of yarn/rejected yarn etc.

(2.) AS the above issue was pending adjudication before the original adjudicating authority, the appellant in the meanwhile, availed the credit of duty paid under AED (T & TA), but did not use the same for payment of AED (GSI) on their final product. As such for the period upto 01.04.2000, a substantial amount of credit got accumulated. In as much as provisions of Rule 57F/12 were introduced by the Cenvat Credit Rules, 2000, the appellant was not entitled to use such credit for further payment of AED (GSI) they claimed the refund of the said accumulated credit of AED (T & TA), which stands rejected by the authorities below.

(3.) THE appellant's contention is that during the relevant period, they were compelled by their Jurisdictional Central Excise Authorities not to utilize the credit of duty paid under AED (T & TA). As a result they had to pay duty out of PLA. Allowing of the credit at this stage is not going to serve any purpose to them in as much as after 2002 Cenvat Credit Rules, such cross utilization is not permissible. As such they have made a prayer for either allowing the refund of the credit of duty paid under AED (T & TA) in cash or in the alternative to allow recasting of their records.