Commissioner of CGST & Central Excise Vs Filatex India Limited (CESTAT Ahmedabad)
In Commissioner of CGST & Central Excise Vs Filatex India Limited, the CESTAT Ahmedabad examined whether Cenvat Credit of basic excise duty (BED) could be utilised for payment of National Calamity Contingent Duty (NCCD) during the period prior to the restrictive amendments introduced in 2016.
The respondent, M/s. Filatex India Ltd., was engaged in the manufacture of Polyester Oriented Yarn (POY) and Yarn Waste. Their final product, POY, attracted both basic excise duty and NCCD at the rate of 1%. The respondent availed Cenvat Credit of BED on inputs such as Polyester Chips and utilised the same for payment of NCCD on finished goods. Revenue objected to such utilisation and issued three show cause notices dated 06.02.2007, 14.08.2007, and 18.02.2008 proposing recovery of ₹4.53 crore along with interest and penalty. The Commissioner dropped the proceedings, following which Revenue filed appeals before the Tribunal.
Revenue argued that NCCD was levied for a specific purpose of creating funds for national calamities and therefore credit of BED should not be allowed for payment of NCCD. Reliance was placed on the Sikkim High Court judgment in Unicorn Industries Vs Union of India, later affirmed by the Supreme Court, wherein it was held that exemption notifications applicable to basic excise duty would not automatically apply to NCCD since NCCD was not basic excise duty. Revenue also relied upon judgments including Modi Rubber Ltd., Rita Textiles Pvt. Ltd., and Gemini Edibles and Fats India Pvt. Ltd.
