Hanuman Re-rolling Mills Pvt. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:

.....the appellants and since the delhi bench has decided that there is no provision under rule 9(2) to recall any credit already utilised correctly, no demand can be made and there is no requirement for any additional payment since the rule does not specifically provide for the same. following the decision of the delhi bench, we set aside the impugned order and allow the appeal with consequential benefit to the appellants.4. before parting with this case, we would like to observe that in case it is the intention of the government to recover the amount determined under rule 9(2) in excess of the credit amount lying with a manufacturer, the rule should be amended specifically to provide for the same in the rules.

Judgment:

The appellants availed CENVAT Credit on inputs after crossing small-scale exemption limit for the financial year, 2002-2003. At the end of the financial year, they had credit of Rs. 28,594.00 (Rupees twenty-eight thousand five hundred and ninety-four) in balance. The department has demanded Rs. 2,23,409.00 (Rupees two lakhs twenty-three thousand four hundred and nine) from the appellants under Rule 9(2) of the CENVAT Credit Rules, 2002, as the amount equivalent to CENVAT Credit in respect of inputs lying in stock and inputs used in the final products lying in stock on 1.4.2003 was Rs. 2,52,003.00 (Rupees two lakhs fifty-two thousand and three).

2. It is the case of the appellants that Rule 9(2) only provides for deduction of the amount mentioned in the said Rule, from the credit in balance and for lapsing of the excess credit. They contend that the Rule does not provide for recovery of the extra amount in case the credit in balance is less than the amount determined under Rule 9(2).

In support of their claim, they cite the decision of the Delhi Bench of the Tribunal in the case of C.C. Ex., Chandigarh v. CNC Commercial Ltd. 2006 (206) ELT 874(Tri.-Del.).

3. After hearing both sides and perusal of case records and the cited decision, we are of the view that the cited decision squarely covers the case of the appellants and since the Delhi Bench has decided that there is no provision under Rule 9(2) to recall any credit already utilised correctly, no demand can be made and there is no requirement for any additional payment since the Rule does not specifically provide for the same. Following the decision of the Delhi Bench, we set aside the impugned Order and allow the appeal with consequential benefit to the appellants.

4. Before parting with this case, we would like to observe that in case it is the intention of the Government to recover the amount determined under Rule 9(2) in excess of the credit amount lying with a manufacturer, the Rule should be amended specifically to provide for the same in the Rules.