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CX – Utilisation of CENVAT credit of Education Cess and SHE Cess – Notfn. 12/2015-CX is not retrospective from 01.03.2015; is effective only from 30.04.2015: CESTAT

2019-TIOL-2044-CESTAT-HYD

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, HYDERABAD
SINGLE MEMBER BENCH
COURT NO. I

Appeal No. E/30138/2018

Arising out of Order-in-Appeal No.TTD-EXCUS-000-APP-077-18-19, Dated: 23.08.2018
Passed by CCCE and ST (Appeals), Visakhapatnam

Date of Hearing: 16.05.2019
Date of Decision: 16.05.2019

M/s PUSHPIT STEELS PVT LTD
INDUSTRIAL ESTATE EXPANSION, YERPEDU MANDAL
CHITTHOOR DISTRICT, ANDHRA PRADESH – 517619

Vs

COMMISSIONER OF CENTRAL TAX
TIRUPATI-GST, TIRUPATI COMMISSIONERATE
WEST CHURCH COMPOUND, MR PALLI ROAD
CHITTHOOR, AP-517507

Appellant Rep by: Shri M Masilamani, Adv.
Respondent Rep by: Shri A V L N Chary, AR

CORAM: P Venkata Subba Rao, Member (T)

CX – During scrutiny of ER-1 Returns filed by assessee for the months of March, 2015 and April, 2015, the department found that assessee had wrongly availed and utilized Cenvat Credit of Education Cess (EC) and Secondary & Higher Education Cess (SHEC) which was availed on or after 01.03.2015 but before the issue of notfn 12/2015-CE (NT) – It is the case of revenue that the notification specifically states that it shall come into force from the date of publication in the official gazette – The issue to be decided is whether the notfn 12/2015-CE (NT) which amended Rule 3(7)(b) to the effect that credit of EC & SHEC paid on inputs or capital goods received in the factory of the manufacturer of final products on or after 01.03.2015 towards payment of Basic Excise Duty will be effective for the clearances made prior to this date or otherwise – The notification does not indicate that it is intended to have retrospective application – It is now well settled legal principle that all fiscal statutes and provisions should be treated as if they have only prospective application unless the law specifically indicates otherwise – Not only does the notification not indicate that it will have retrospective application, it also states specifically that it shall come into force from the date of publication in the official gazette which is 30.04.2015 – Therefore, the unamended provisions of Rule 3(7)(b) apply prior to 30.04.2015, according to which the assessee could not have utilized Cenvat Credit of EC & SHEC towards payment of Basic Excise Duty – After this date, they could have taken credit of inputs or capital goods received in the factory on any day after 01.03.2015 and utilize it for the payment of Basic Excise Duty – Consequently, the impugned order is upheld: CESTAT

Appeal rejected

FINAL ORDER NO. A/30541/2019

Per: P V Subba Rao:

1. This appeal is filed against Order-in-Appeal No. TTD-EXCUS-000-APP- 077-18-19 dated 23.08.2018.

2. Heard both sides and perused the records.

3. The facts of the case in brief are that during scrutiny of ER-1 Returns filed by the appellant for the months of March, 2015 and April, 2015 the officers of the department found that the appellant had wrongly availed and utilized Cenvat Credit of Education Cess (EC) and Secondary & Higher Education Cess (SHEC) to the tune of Rs.5,34,621/- which was availed on or after 01.03.2015 but before the issue of notification 12/2015-CE (NT) dated 30.04.2015. Prior to the issue of the aforesaid notification, Rule 3(7)(b) of Cenvat Credit Rules, 2004 read as follows:

“(b) CENVAT Credit in respect of –

i. ……

ii. ……

iii. The education cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);

iiia The secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);

iv ……

v ……

vi the education cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004); and

via the secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and

vii ……

shall be utilized towards payment of duty of excise or as the case may be, of service tax leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), or the education cess on excisable goods leviable under section 91 read with section 93 of the said Finance (No.2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007) or the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003), or the education cess on taxable services leviable under section 91 read with section 95 of the said Finance (No.2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007), or the additional duty of excise leviable under section 85 of the Finance Act, 2005 (18 of 2005) respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs themselves, if such inputs are removed as such or after being partially processed or on any output service.

Provided that the credit of the education cess on excisable goods and the education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or for the payment of the education cess on taxable services.

Provided further that the credit of the Secondary and Higher Education Cess on excisable goods and the Secondary and Higher Education Cess on taxable services can be utilized, either for payment of the Secondary and Higher Education Cess on excisable goods or for the payment of the Secondary and Higher Education Cess on taxable services

Explanation – …………”

4. In other words, prior to the issue of this notification, there was restriction that any credit of EC/SHEC can be utilized towards payment of EC/SHEC as the case may be. There was no permission to utilize the credit of these Cesses towards payment of Basic Excise Duty. Subsequently, the aforesaid notification 12/2015-CE (NT) dated 30.04.2015 was issued which reads as follows:

“In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely :-

1.

(1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 3, in sub-rule (7), in clause (b), after the second proviso, the following shall be substituted, namely :-

“Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act :

Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act :

Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act.”

5. It is the case of the revenue that the notification specifically states that it shall come into force from the date of publication in the official gazette. There is nothing in the notification that shows that it is intended to have retrospective application. Therefore, the appellant was free to use the credit of EC/SHEC paid on inputs or capital goods for payment of Basic Excise Duty w.e.f. 30.04.2015 when the notification was issued. Prior to this date the unamended Rule 3(7)(b) applies and such cross utilization was not permissible. Accordingly, the show cause notice demanded a duty of Rs.5,34,621/- being the amount wrongly utilized towards payment of Basic Excise Duty and it was confirmed in the Order-in-Original. The appellant appealed to the first appellate authority who, upheld the order of the lower authority and rejected the appeal. Hence, this appeal.

6. Learned consultant of the appellant submits that a plain reading of the notification 12/2015-CE (NT)shows that it permitted utilization of credit of EC/SHEC paid on inputs or capital goods received on or after 01.03.2015 for payment of Basic Excise Duty. Therefore, although, notification was issued on 30.04.2015, in effect, the utilization could have been done after 01.03.2015. They have utilized the entire credit during that period only and therefore they are not liable to demand or the penalties which have been imposed. He also submitted an article written by a Chartered Accountant, in support of his arguments.

7. I have considered the arguments on both sides and perused the records. The issue falls in a narrow compass. The issue to be decided is whether the notification 12/2015-CE (NT) dated 30.04.2015 which amended Rule 3(7)(b) to the effect that credit of EC & SHEC paid on inputs or capital goods received in the factory of the manufacturer of final products on or after 01.03.2015 towards payment of Basic Excise Duty will be effective for the clearances made prior to this date or otherwise. The notification does not indicate that it is intended to have retrospective application. It is now well settled legal principle that all fiscal statutes and provisions should be treated as if they have only prospective application unless the law specifically indicates otherwise. In this case, not only does the notification not indicate that it will have retrospective application, it also states specifically that it shall come into force from the date of publication in the official gazette which is 30.04.2015. Therefore, the unamended provisions of Rule 3(7)(b) apply prior to 30.04.2015, according to which the appellant could not have utilized Cenvat Credit of EC & SHEC towards payment of Basic Excise Duty. After this date, they could have taken credit of the inputs or capital goods received in the factory on any day after 01.03.2015 and utilize it for the payment of Basic Excise Duty. Consequently, I find no infirmity in the impugned order and the same is upheld.

8. The appeal is rejected and the impugned order is upheld.

(Order dictated and pronounced in the open court)

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