2008 (10) TMI 458 - AT - Central Excise

Summary

Issues involved: Conversion of DTA unit to 100% EOU, utilization of accumulated capital goods credit, dispute over duty payment, waiver of pre-deposit and stay recovery.

Conversion of DTA unit to 100% EOU: The appellants were initially operating as a DTA unit before being converted to a 100% EOU as permitted by the Development Commissioner. Upon conversion, they had accumulated capital goods credit in their CENVAT account. The Department objected to the utilization of this credit for duty payment on DTA clearances after the conversion.

Utilization of accumulated capital goods credit: The appellants utilized a portion of the accumulated capital goods credit for duty payment on their DTA clearances post-conversion. This action was contested by the Department, leading to a dispute that was brought before the Tribunal.

Prima facie case and legal precedent: After hearing arguments from both sides, the Tribunal found a prima facie case against the impugned demand. Reference was made to a specific case law, Stay Order No. 348/08 in the matter of M/s. Sun Pharmaceuticals Industries Ltd. v. CCE, Pondichery, which highlighted the applicability of Rule 17 of Central Excise Rules, 2002. The Tribunal noted that the Department cannot prohibit the EOU from availing CENVAT credit based on certain circulars.

Waiver of pre-deposit and stay of recovery: In light of the above findings, the Tribunal ruled in favor of the appellants. It granted a waiver of pre-deposit and ordered a stay of recovery concerning the adjudged dues. This decision provides relief to the appellants in the ongoing dispute over the duty payment related to the utilization of the accumulated CENVAT credit.