2012 (12) TMI 143 - AT - Central Excise

Waiver of pre-deposit cenvat credit - revenue submitted that credit of Education Cess is permissible only for two times whereas the applicants in the present case have availed the benefit of credit at third time. - Held that - Applicability of Rule 3(7) of the Cenvat Credit Rules and in the present case major portion of the dispute is after the amendment of Cenvat Credit Rules i.e. 7-9-2009 - Education Cess and Secondary Education Cess as referred to in Part B of the proviso to the Cenvat Credit Rules, prima facie, credit is available to the applicants - Stay petition is allowed.

Summary

Issues:
Applicability of Rule 3(7) of the Cenvat Credit Rules regarding Education Cess and Secondary Education Cess for manufacturers of medicaments under Chapter heading 30 of Central Excise Tariff Act, 1985 receiving inputs from 100% EOU suppliers.

Analysis:
The case involves an application by M/s. Encore Healthcare Pvt. Ltd. for waiver of pre-deposit and stay of recovery of confirmed amounts. The applicants, manufacturers of medicaments, avail Cenvat Credit on inputs received from various suppliers, including 100% EOU. The dispute centers around the availability of Cenvat Credit on Education Cess and Secondary Education Cess paid by the 100% EOU suppliers. The applicants argue that Rule 3(7) of the Cenvat Credit Rules allows for such credit, citing a Tribunal decision and a favorable order from the Commissioner (Appeals) prior to the rule amendment.

The Authorized Representative for the applicants contends that the proviso in Rule 3(7) inserted in 2009 clarifies the admissibility of Education Cess and Secondary Education Cess as Cenvat Credit. He relies on a previous Tribunal decision supporting the credit availability and points out that their own unit received the benefit of Cenvat credit pre-amendment without challenge from the department. On the other hand, the Deputy Commissioner argues that the Cenvat Credit Rules permit credit for Education Cess only twice, whereas the applicants have claimed it a third time, supporting the lower authorities' findings in favor of the Revenue.

Upon review, it is noted that the dispute primarily concerns the interpretation of Rule 3(7) of the Cenvat Credit Rules, particularly post-amendment in 2009. The Tribunal finds that prima facie, credit for Education Cess and Secondary Education Cess is available to the applicants under the amended rules. Additionally, the case aligns with a previous Tribunal decision pre-amendment. Consequently, the Tribunal grants the waiver of pre-deposit and stays the recovery of the amounts adjudged in the Order-in-Appeal until the appeal is disposed of.

In conclusion, the Tribunal allows the stay petition, ruling in favor of the applicants based on the interpretation of Rule 3(7) of the Cenvat Credit Rules and the precedents cited, providing relief in terms of pre-deposit and recovery stay pending appeal resolution.