2010 (2) TMI 1125 - AT - Central Excise

CENVAT credit - whether the appellant is eligible to avail Cenvat credit on the entire amount of Education Cess paid on CVD by 100% EOU? - N/N. 23/2003-C.E. dated 31-3-2003 - Held that - appellants are entitled to avail 100% credit of Education Cess on the goods supplied to them by a 100% EOU - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether appellant is eligible for Cenvat credit on entire Education Cess paid by 100% EOU or only as per Rule 3(7)(b) of Cenvat Credit Rules, 2004.

Analysis:
The appeals were filed against Orders-in-Appeal passed by the Commissioner of Central Excise, Customs & Service Tax, Visakhapatnam. The main issue revolved around the eligibility of the appellant to avail Cenvat credit on the full amount of Education Cess paid by a 100% EOU. The Revenue contended that the appellant could only avail credit up to 50% of Education Cess as per Notification No. 23/2003-C.E., dated 31-3-2003. The appellant argued that a previous decision by the Bench in the case of Shreya Pets Pvt. Ltd. supported their claim. The Tribunal analyzed the issue in detail, considering the provisions of Rule 3(7)(b) of the Cenvat Credit Rules, 2004.

The Tribunal referred to a Mumbai Bench decision involving Emcure Pharmaceuticals Ltd., which held that an assessee could take credit of Education Cess paid by a 100% EOU as per Rule 3(7)(a) and Rule 3(7)(b) of the Cenvat Credit Rules. The Tribunal further discussed the interpretation of non-obstante clause and cited relevant legal precedents to support the admissibility of Education Cess credit. The Tribunal highlighted that Rule 3(1) applies to all manufacturers, including 100% EOU, and Rule 3(7)(b) allows utilization of Cenvat credit for various purposes, including Education Cess. The Tribunal concluded that the credit of Education Cess is admissible to the appellants, setting aside the impugned order and allowing the appeal.

The Cost Accountant representing the appellant reiterated their eligibility for Cenvat credit on Education Cess, while the SDR representing the department reiterated their contentions. The Tribunal, after careful consideration and relying on the Mumbai Bench decision, held that the appellants were entitled to avail 100% credit of Education Cess paid by a 100% EOU. The Tribunal found the Commissioner's decision to be incorrect and set it aside, allowing the appeal with consequential relief. The Tribunal emphasized that the issue was now settled in favor of the appellant, following the precedent set by a previous decision of the Bench in a similar case.

In conclusion, the Tribunal ruled in favor of the appellant, allowing them to avail 100% credit of Education Cess paid by a 100% EOU. The decision was based on a detailed analysis of the relevant legal provisions and precedents, ultimately setting aside the Commissioner's decision and providing consequential relief to the appellant.