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2015 (3) TMI 1098 - AT - Central ExciseDemand of reversal of Cenvat Credit - Credit on the used capital goods cleared without payment of duty - SEZ Unit - Held that - period involved in this case is October 2005. The appellants cleared inputs and capital goods etc. by following the procedure laid down under Notification 58/2003. On identical issue the Tribunal in the case of M/s. Wabco TVS (India) Ltd. (2013 (2) TMI 165 - CESTAT CHENNAI) rejected the Revenue appeal and held that the clearance of goods to their own unit at SEZ in not required reversing the cenvat credit. Therefore Tribunal s decision applies to the facts of the present case. Further I find that as rightly contended by the appellant there is no specific recovery mechanism of credit on the inputs and capital goods cleared during the relevant period. The specific provision was introduced only w. e. f. 01. 02. 2013. This issue was specifically dealt by the Tribunal at Mumbai in the case of IspatMetallics Industries Ltd. (2005 (10) TMI 129 - CESTAT MUMBAI). By following these Tribunal s decisions I hold that the appellants are not liable to reverse Cenvat credit availed on the capital goods cleared to their own unit at SEZ. - Decided against assessee.
Issues:
1. Reversal of Cenvat Credit on used capital goods cleared without payment of duty to own unit at SEZ. 2. Appellant's appeal against Commissioner (Appeals) order. 3. Revenue's appeal against setting aside penalty by Commissioner (Appeals). Analysis: Issue 1: Reversal of Cenvat Credit The dispute revolved around the demand for the reversal of Cenvat credit on used capital goods cleared without duty payment to the appellant's unit at SEZ. The adjudicating authority upheld the reversal of credit and imposed a penalty, which was later set aside by the Commissioner (Appeals). The appellant argued that the relevant period was October 2005 and relied on Circular F. No. 68/2003-Cus, stating that the credit availed on inputs and capital goods cleared to SEZ without reversal was permissible. The appellant also highlighted the absence of a recovery mechanism for credit during the period, which was introduced only in 2013. Citing case laws, including CCE Hyderabad Vs. Navodhaya Plastic Industries Ltd., the appellant contended that the credit disallowance without depreciation was unjust. Issue 2: Appellant's Appeal The appellant's counsel emphasized that the Tribunal's decision in the case of M/s. Wabco TVS (India) Ltd. supported their position that clearing goods to their SEZ unit did not necessitate the reversal of Cenvat credit. The absence of a specific recovery mechanism during the relevant period, as addressed in the case of IspatMetallics Industries Ltd., further strengthened the appellant's argument. Consequently, the Tribunal held in favor of the appellant, allowing their appeal and negating the need for penalty imposition. Issue 3: Revenue's Appeal On the other hand, the Revenue argued that SEZ and EOU should be treated equally, requiring an equal amount of credit to be reversed as per Rule 3(5) of CCR. Citing case laws such as CCE, Chennai-II Vs. Sundaram Brake Linings Ltd., the Revenue contended that the inputs purchased by the appellant and subsequently transferred to SEZ warranted credit reversal. However, the Tribunal's decision aligned with the appellant's stance, emphasizing the absence of a specific recovery mechanism during the relevant period and ruling in favor of the appellant. In conclusion, the Tribunal's judgment favored the appellant, highlighting the lack of a recovery mechanism for credit availed on capital goods cleared to their SEZ unit during the relevant period. The decision was supported by previous Tribunal rulings and case laws, leading to the allowance of the appellant's appeal and the rejection of the Revenue's appeal.
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