IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI WEDNESDAY, THE 17TH SEPTEMBER 2008 / 26TH BHADRA 1930 WP(C).No. 27529 of 2008(B) -------------------------- PETITIONER(S): --------------- APOLLO TYRES LIMITED, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD KOCHI 682 031,REPRESENTED BY ITS DIVISIONAL HEAD (COMMERCIAL) MR.A.N.LAKSHMANAN. BY ADV. SRI.JOSEPH KODIANTHARA SRI.TERRY V.JAMES RESPONDENT(S): --------------- 1. THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, CALICUT COMMISSIONERATE, C.R. BUILDING, MANANCHIRA, CALICUT 673 001. 2. THE JOINT COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, CALICUT COMMISSIONERATE,MANANCHIRA,CALICUT 673 001 3. THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, THRISSUR. 4. THE SUPERINTENDENT OF CENTRAL EXCISE PERAMBRA, CHALAKUDY, THRISSUR DISTRICT. 5. THE SUPERINTENDENT OF CENTRAL EXCISE (PREVENTIVE) CALICUT COMMISSIONERATE C.R. BUILDING, MANANCHIRA, CALICUT 673 001. ADV. SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: V.GIRI, J ------------------- W.P.(C).27529/2008 -------------------- Dated this the 17th day of September, 2008 JUDGMENT Petitioner is a manufacturer of tyres and has one unit in Perambra. Tyres are eligible to excise duty under the Central Excise Act, 1944. One of the raw materials used in the manufacture of tyres is Nylon Tyre Cord Fabric. Apparently, the said product, apart with the duty under the Act also suffers Additional Excise Duty and it is the case of the petitioner that earlier the credit for such Additional Excise Duty could be utilized only for further payment of additional excise duty on final products. According to the petitioner, this situation was changed by the Finance Act, and Cenvat Credit could be taken for the additional excise duty paid on the inputs, in relation to the basic excise duty on the final product as well. The Finance Act of 2004 brought in a retrospective amendment to Rule 3 of the Cenvat Credit Rules which made it clear that the credit of the additional duty of excise leviable under Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and paid W.P.(C).27529/2008 2 on or after 1st of April, 2000, may be utilized towards payment of duty of excise leviable under the First schedule or the Second schedule to the Central Excise Tariff Act. Obviously the question arose as to whether the credit for the AED-GSI taken prior to 1.4.2000 and utilized for the payment of basic excise duty prior to the amendment effected by the Finance Act of 2004, had to be reversed. In other words, whether the credit for the AED-GSI taken prior to 1.4.2000 could be utilized for the payment of basic excise duty which fell due prior to the amendment brought about by the Finance Act 2004. It seems that the petitioner without getting into further controversy chose to suffer reversal of the credit which it had already taken and paid an amount of Rs.13,45,34,520/-. According to the petitioner, the payment of the additional excise duty on DNTCF actually took place only after 1.4.2000 and therefore, the petitioner would still be entitled to take credit for the AED-GSI paid on the NTCF for the discharge of the liability of basic excise duty on tyres, because the actual W.P.(C).27529/2008 3 payment was effected only on 1.4.2000. It seems that the Department is of the opinion that the petitioner would not be entitled to do so and the petitioner apprehends on the basis of Exts.P8 and P9 that coercive proceedings may be initiated against it for recovery of amount which, according to the Department, has been wrongly taken credit of by the petitioner for discharge of the liability to basic excise duty on manufacture of tyres. It is contended by the Department that credit was earlier wrongly availed of by the petitioner and it was only after proceedings were taken against the petitioner, that the amount was actually recovered from him, and it is not open to the petitioner to avail of the same credit or a similar credit but on the final product as such. 2. In my view, if the Department is of the opinion that the petitioner has wrongly availed of a credit which he is not entitled to, or that the petitioner is not entitled to avail of the same against the basic excise duty payable on the final manufactured products, Department is W.P.(C).27529/2008 4 entitled to proceed against the petitioner and seek recovery of amount due from the petitioner. Department is so entitled in terms of Section 11A of the Central Excise Act read with rule 12 of the Cenvat Credit Rules. 3. Learned counsel for the respondents submits that Ext.P8 communication from the Superintendent of Central Excise, only requires the petitioner to explain the authority under which it had availed and utilized Cenvat credit of amount so recovered. Department may proceed to issue a notice in terms of Section 11A of the Act and obviously, if there are objections by the petitioner, then an order will have to be passed by the competent authority before proceeding to effect recovery in terms of the provisions of the Act. Learned counsel for the Department submits that coercive proceedings against the petitioner in respect of the said amount, which is referred to in Ext.P8, shall obviously be taken only after a notice is issued, objections invited and an W.P.(C).27529/2008 5 order is passed in terms of Section 11A of the Act. Recording the above submission writ petition is disposed of. V.GIRI, Judge mrcs