215 elt 3 - bombay dyeing (sc)

This query is : Resolved

Guest

Guest (Querist)

06 August 2011 Dear Experts please explain the ratio of the case law-
CCEx. v. Bombay dyeing & Mfg Co. Ltd [2007]
215 ELT 3 (SC)

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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06 August 2011 The assessee manufactured gray fabrics from yarn. The gray fabric was exempt from excise duty under a
notification if the following two conditions were satisfied:
(i) the duty on yarn (input) was paid before claiming the exemption and
(ii) CENVAT credit for duty paid on yarn (input) was not taken.
The duty on yarn was supposed to be paid at the spindle stage. However, owing to practical difficulties the
assessee deferred the payment of duty from spindle stage to the stage of clearance of gray fabric. At this stage
the duty was paid along with the appropriate interest. The assessee took the credit for duty paid on yarn but
reversed the same before its utilization.
The Apex Court observed that both the conditions of the notification were fulfilled as duty on yarn, though paid on
deferred basis, was paid before the clearance of gray fabric on which exemption was claimed. Hence, payment
was made before stage of exemption. Further, the assessee did not utilize the credit, which it got on payment of
duty on input (yarn). The Supreme Court held that since the entry for credit was reversed before utilizing the
same, it would amount to not taking of credit. Thus, gray fabrics were subject to nil rate of duty.

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Guest

Guest (Querist)

07 August 2011 Dear Sir,

Please differentiate between 'taking credit' and 'utilising'.

I assumed they were both the same.

Thank You

Guest

Guest (Querist)

08 August 2011 "Taking credit means the while booking the invoice or making the payment accounting the credit availability of CENVAT in invoice, utilizing means the same credit we are adjusting against the tax payment"
-CMA.Ramesh Krishnan

https://www.caclubindia.com/experts/taking-credit-740865.asp

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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11 August 2011 Actually the assessee manufactured gray fabrics from yarn. The gray fabric was exemp The assessee manufactured gray fabrics from yarn. The gray fabric was exempt from excise duty under a notification if the following two conditions were satisfied:

(i)the duty on yarn (input) was paid before claiming the exemption and
(ii) CENVAT credit for duty paid on yarn (input) was not taken.
The duty on yarn was supposed to be paid at the spindle stage. However, owing to practical difficulties the assessee deferred the payment of duty from spindle stage to the stage of clearance of gray fabric. At this stage the duty was paid along with the appropriate interest. The assessee took the credit for duty paid on yarn but reversed the same before its utilization.
The Apex Court observed that both the conditions of the notification were fulfilled as duty on yarn, though paid on deferred basis, was paid before the clearance of gray fabric on which exemption was claimed. Hence, payment was made before stage of exemption. Further, the assessee did not utilize the credit, which it got on payment of duty on input (yarn). The Supreme Court held that since the entry for credit was reversed before utilizing the same, it would amount to not taking of credit. Thus, gray fabrics were subject to nil rate of duty.
t from excise duty under a notification if the following two conditions were satisfied:
(i) the duty on yarn (input) was paid before claiming the exemption and
(ii) CENVAT credit for duty paid on yarn (input) was not taken.
The duty on yarn was supposed to be paid at the spindle stage. However, owing to practical difficulties the assessee deferred the payment of duty from spindle stage to the stage of clearance of gray fabric. At this stage the duty was paid along with the appropriate interest. The assessee took the credit for duty paid on yarn but reversed the same before its utilization.
The Apex Court observed that both the conditions of the notification were fulfilled as duty on yarn, though paid on deferred basis, was paid before the clearance of gray fabric on which exemption was claimed. Hence, payment was made before stage of exemption. Further, the assessee did not utilize the credit, which it got on payment of duty on input (yarn). The Supreme Court held that since the entry for credit was reversed before utilizing the same, it would amount to not taking of credit. Thus, gray fabrics were subject to nil rate of duty.

http://www.primeacademy.com/questions/final/IndirectTax-final-may08.pdf

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