PARLE SOFT DRINKS (P) LTD. Vs. CCE

JUDGEMENT

(1.) By this appeal M/s Soft Drinks (P) Ltd. the appellants herein challenge the Order -in -Appeal No. 161/2002 (M -II) dated 7/8 November 2002 passed by the Commissioner of Central Excise (Appeals), Chennai whereby the Commissioner has upheld the order passed by the original authority an rejected the appeal filed by the appellants before him.

(2.) Brief facts of the case are that the appellants are engaged in the manufacture of mineral waters with brand name "Bisleri" falling under Chapter heading 2201.19 of the CETA, 1985. They were availing Cenvat Credit on their inputs and capital goods under Rule 57AA and Rule 57AB of the CER, 1944. They have taken credit on the input "preform and polyester chips" falling under Chapter heading 3926.90 and 3907.60 respectively received from their suppliers viz. M/s Futura Polymers Ltd. Manali, Chennai, which is a 100% EOU. The supplier was clearing the goods to the appellants under DTA sales in terms of Notification No. 2/95 by paying 50% of each of duties of Customs payable on the goods cleared and the appellants in turn availed the credit of duty corresponding to the additional duty of Customs (being restricted to 50% in terms of the said Notification). However vide their letter dated 5.1.2001 they have stated that they have taken Rs. 10,64,588 and Rs. 23,868 on 12.1.2001 in their Cenvat account being the differential credit to the extent of balance of 50% of CVD payable on the goods received by them from 100% EOU. It was in these circumstances that show cause No. 176/2001 dated 20.7.2001 was issued to the appellants alleging that inasmuch as the appellants are eligible to take credit on the invoices raised by an 100% EOU to the extent of the additional duties of Customs paid by the said unit under Section 3 of the Customs Tariff Act, 1975 on the goods cleared to the assessee, they are not entitled to take the differential credit and the total credit of Rs. 10,76,522 so availed is liable to be demanded from the assessee and the show cause notice culminated in the order of adjudication passed by the Deputy Commissioner by which he has disallowed the credit of Rs. 10,76,522 under Rule 57AH of CE Rules, 1944 and ordered recovery of the same. The appellants preferred appeal against the said order before the Commissioner (Appeals), who upheld the Order -in -Original and rejected the appeal, hence this appeal.

(3.) Shri G. Seetharaman, learned Consultant appearing for the appellants at the outset submitted that the issue in the present case is covered by the j udgment of the Larger Bench of the Tribunal in the case of Vikram Ispat v. CCE, Mumbai -III and also in the case of Innovative Tech Pack Ltd. v. CCE, New Delhi which has referred to the decision in the case of Vikram Ispat. He has particularly referred to paras 16 and 17 of the judgment of the Tribunal in the case of Vikram Ispat (supra). He submitted that the authorities below misinterpreted the statutory provisions for availing Cenvat Credit in disregard of the observations of the Tribunal and have chosen to disallow the differential credit. He submitted that according to Sub -rule (2) of Rule 57AB of the CE Rules, 1944 as it stood at the relevant time, credit of duty in respect of inputs or capital goods by a 100% EOU shall be restricted to the extent which is equal to the additional duty leviable on like goods under Section 3 of the Customs Tariff Act, 1975 paid on such goods. He further submitted that the lower appellate authority under a mistaken notion that additional duty under Section 3 of the CTA, 1975 "paid" on the inputs only is admissible, has rejected the appeal. He submitted that this finding of the lower appellate authority is not correct in view of the rulings rendered by the Larger Bench of the Tribunal as noted above. He therefore, submitted that the appellants are entitled to the benefit of differential credit and prayed for following the appeal.