2007 (7) TMI 509 - AT - Central Excise

Summary

Issues:
- Eligibility of the appellant to avail Cenvat credit of Education Cess paid by a 100% EOU.

The judgment concerns a stay application against the confirmation of a duty demand of Rs. 1,88,367. The demand arose due to the appellant availing Cenvat credit of Education Cess paid by a 100% EOU. The revenue contended that the appellant is not eligible for this credit, citing Rule 3(7)(a). The appellant argued that this rule applies only to Basic Customs Duty and CVD, not Education Cess. The ld. SDR referenced a Supreme Court decision stating that establishing a prima facie case alone is insufficient for passing an interim order and emphasized the lack of claimed financial hardship by the appellant.

The Cenvat Credit Rules, 2004 allow the assessee to avail credit of specified duties. The appellant's eligibility to avail Cenvat credit is supported by the rules, including Education Cess on excisable goods. Rule 3(7)(a) carves out an exception for restricting Cenvat credit on duties paid by a 100% EOU. The ld. SDR argued that this rule only applies to BCD and CVD, not Education Cess, but the tribunal disagreed, emphasizing the legislative intent to reduce duty cascading effects.

The Supreme Court's decision highlighted the need to consider the factual scenario in stay applications. In this case, Rule 3(1) allows the appellant to avail credit of specified duties, while Rule 3(7)(a) restricts credit on BCD and CVD paid by a 100% EOU. However, this restriction does not extend to Education Cess, which the appellants can claim as Cenvat credit. Consequently, the tribunal found that the appellants had made out a prima facie case for waiving the duty amount involved, granting the application and staying recovery until the appeal's disposal.