2013 (2) TMI 417 - AT - Central Excise

Denial of Cenvat credit of Education cess - Rule 3 of the Cenvat Credit Rules, 2004 - Rule 3(7)(A) of the Cenvat Credit Rules does not specifically allow availment of Cenvat Credit of Education Cess - Invoice issued by 100% EOU - Notification No.23/2003-CE dated 01/03/2003 - Held that - Following the decision in case of EMCURE PHARMACEUTICALS LTD. (2008 (1) TMI 147 - CESTAT, MUMBAI) that non-obstante clause in Rule 3(7)(a) of CCR, 2004 is applicable in respect of BED paid u/s 3. - In favour of assessee

Summary

Issues:
1. Availment of excess Cenvat Credit by the assessee from a 100% EOU.
2. Interpretation of Notification No.23/2003-CE dated 01/03/2003 regarding duty payment by the 100% EOU.
3. Permissibility of availing Cenvat Credit of Education Cess and S & H. Education Cess on the aggregate of Customs Duties.
4. Confirmation of demand for wrongly availed Cenvat Credit and imposition of penalty.
5. Challenge by the Assessee against the order of the Original Adjudicating Authority successfully before the Commissioner (A) and the Revenue's appeal.

Analysis:

1. The judgment revolves around the assessee's availing of excess Cenvat Credit from a 100% EOU, M/s.Reliance Industries Ltd. The assessee purchased Poly Propylene from the EOU and claimed Cenvat Credit not in line with the Cenvat Credit Rules, 2004. The excess credit amount was detailed in the show-cause notice (SCN), leading to scrutiny of invoices issued by the EOU, which indicated the clearance of goods under a specific notification.

2. The interpretation of Sr.No.1 of Notification No.23/2003-CE dated 01/03/2003 was crucial. It was observed that the 100% EOU had paid excise duty while supplying goods to the assessee as per the said notification. The method of duty calculation was outlined in Annexure-A of the invoices issued by the EOU, specifying various components like BCD, CVD, Education Cess, and S & H. Ed. Cess.

3. The judgment delved into the permissibility of availing Cenvat Credit by the DTA unit, M/s.Bhim Polyfab Industries, for Education Cess and S & H. Education Cess paid on CVD by the 100% EOU. It was noted that the assessee improperly claimed Cenvat Credit on the aggregate of Customs Duties, which was not allowed under Rule 3 of the Cenvat Credit Rules, 2004. The excess credit amount was calculated and highlighted.

4. Subsequently, proceedings were initiated resulting in the confirmation of demand for the wrongly availed Cenvat Credit and the imposition of a penalty. The Assessee challenged the Original Adjudicating Authority's decision successfully before the Commissioner (A), leading to an appeal by the Revenue.

5. The appeal by the Revenue contended that the Commissioner (A) erred in allowing the Cenvat Credit of Education Cess based on a specific Tribunal decision. However, the judgment cited the relevance of Rule 3(7)(A) of the Cenvat Credit Rules during the relevant period, emphasizing the applicability of the decision in the case of EMCURE Pharmaceuticals Ltd. The appeal by the Revenue was rejected, aligning with the precedent set by the Tribunal in the mentioned case.

This comprehensive analysis covers the key issues addressed in the judgment, highlighting the intricacies of Cenvat Credit rules, duty payment interpretations, and the application of legal precedents in resolving the dispute.