2011 (3) TMI 632 - AT - Central Excise

Waiver of the pre-deposit - cenvat credit lying unutilized in the accounts of de-bonded 100% EOU is transferred to their DTA unit and the duty paid on the de-bonding is not eligible to the assessee as per the existing provisions of Cenvat Credit Rules 2004 - After this date there is no dispute that the 100% EOU is entitled to avail the cenvat credit and if the said credit cannot be utilized the 100% EOU can claim the refund under Rule 5 of the Cenvat Credit Rules - If the cenvat credit is not transferred to the DTA unit Revenue would have to refund the amount in case to the 100% EOU if in accordance with law - Decided in favour of the assessee

Summary

Issues:
1. Waiver of pre-deposit of credit, interest, and penalty amounts.
2. Eligibility of cenvat credit transfer from de-bonded 100% EOU to DTA unit.
3. Interpretation of Cenvat Credit Rules, 2004 regarding credit transfer.
4. Application of Rule 3 and Board Circular No. 799/32/2004-CX.
5. Dispute over the amalgamation of 100% EOU and DTA units.

Analysis:

1. The appellant filed a stay petition seeking the waiver of pre-deposit of credit, interest, and penalty amounts. The dispute arose from the lower authorities' finding that the appellant availed ineligible cenvat credit due to transferring credit from a de-bonded 100% EOU to their DTA unit.

2. The appellant's counsel argued that the 100% EOU and DTA unit were part of the same entity, supported by a letter from the Assistant Commissioner allowing credit transfer post-de-bonding. They cited Rule 3 of Cenvat Credit Rules and relevant case laws to support their claim for credit transfer.

3. The respondent contended that there was no merger or amalgamation under the Company's Act, treating both units as separate entities. They argued against the transfer of credit, stating that the EOU could not have availed cenvat credit as exported goods are duty-free, and Rule 3 does not apply to this scenario.

4. Upon review, the Tribunal found that the credit transferred from the EOU to the DTA unit was based on duty-paid documents and procurements, allowed by the Assistant Commissioner. The Tribunal noted that post-2004, EOUs were entitled to cenvat credit, and the appellant's units were part of the same entity, justifying the credit transfer.

5. The Tribunal considered the Board's circular and ruled in favor of the appellant, granting a waiver of the adjudged demands and staying the recovery until the appeal's disposal. The judgment emphasized the unity of the appellant's units and the eligibility for credit transfer under the prevailing rules and circulars.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the arguments presented and the Tribunal's decision regarding the waiver of pre-deposit and cenvat credit transfer.