Demand of Duty can’t be sustained when Cenvat Credit Amount utilized in subsequent period and No loss has been made to Revenue: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the demand duty cannot be sustained when the cenvat credit amount is utilized in the subsequent period and no loss has been made to the revenue.

The Appellants, M/s. Eminent Healthcare & Cosmetics Private Limited are manufacturers of Cosmetics falling under Chapter 33 of the Central Excise Tariff, 1985. The Deputy Commissioner of Central Excise, Guwahati by exercising the power under Section 153(4) of the Finance Act, 2003 passed confirming the demand of Rs.22,01,868/- together with interest amounting to Rs.15,65,611/-. On appeal, the Commissioner (Appeals) passed the impugned order confirming the demands.

The Appellant submitted that immediately after the amendment of NN-32/99-CE, vide NN-61/02-CE w.e.f. 23.12.2002, they started utilizing the accumulated CENVAT credit on inputs as well as capital goods available with it diligently towards the payment of duty for subsequent months. Starting from 23.12.2002, they have utilized CENVAT credit for the payment of duty, and on the continuous utilization, the balance in the CENVAT account became “Nil”.

It was submitted that the excess refund that the department claimed to have sanctioned to the Appellants up to 22.12.2002 was adjusted by sanctioning lower/nil refund claims during the period after 23.12.2002 on account of the utilization of the accumulated CENVAT credit.

In the case of Commissioner of C. Ex., Jammu vs. New India Wire, the CESTAT, Delhi allowed the contention of the assessee that once the very same amount of Cenvat credit was utilized in the subsequent period, there is no loss to the revenue and thus, no demand is sustainable. It was also held that confirming demand in such a scenario would defeat the purpose of the notification.

The Two-member bench comprising of R. Muralidhar (Judicial member) and K. Anpazhakan (Technical member) in view of the cited decision held that the demand confirmed in the impugned order was not sustainable. Therefore, the bench set aside the order, and the appeal of the appellate was allowed.

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