2010 (3) TMI 961 - AT - Central Excise

Summary

Issues:
1. Extent of credit available on inputs procured from a 100% EOU.
2. Supply of electrical appliances for telephone lines without payment of duty under Notification No. 10/97-C.E.

Analysis:

*Issue 1: Extent of credit available on inputs procured from a 100% EOU*
The first issue in this appeal pertains to the credit available on inputs procured from a 100% EOU. The Original Authority had determined the credit based on the duty paid by the EOU under Notification No. 2/95-C.E. The appellant argued that as per the decision in the case of Vikram Ispat v. CCE, Mumbai-II, the credit taken by them should be available. The Larger Bench of the Tribunal in the Vikram Ispat case clarified that the Modvat credit should be restricted to the extent of duty equal to the additional duty leviable on like goods. The Tribunal held that the duty paid by the EOU should be compared to the additional duty of customs payable on like goods, and the lesser amount should be available as credit. In the present case, the duty payable on like goods was less than the total duty paid by the EOU, entitling the appellant to the credit. Therefore, the appeal succeeded on this issue.

*Issue 2: Supply of electrical appliances for telephone lines without payment of duty*
The second issue revolved around the supply of electrical appliances for telephone lines without duty payment under Notification No. 10/97-C.E. The Department contended that the appellant should pay 8% of the total price along with interest due to lack of separate accounts for exempted and non-exempted products. The appellant argued that the goods were not exempted per se and the exemption applied based on end use. The Tribunal noted that the clearance under the said notification was known to the department through periodic returns filed by the appellant. The demand was deemed time-barred, and without delving into the merits, the Tribunal ruled in favor of the appellant. Consequently, the appeal was allowed with no imposition of penalties.

In conclusion, the Tribunal's judgment addressed the issues of credit availability on inputs from a 100% EOU and the supply of electrical appliances without duty payment. The decision favored the appellant on both issues, emphasizing the application of relevant notifications and the time-barred nature of the demand in the second issue.