2014 (6) TMI 27 - AT - Central Excise

CENVAT Credit - cenvat credit lying unutilized in the accounts of de-bonded 100% EOU is transferred to their DTA unit - Held that - prima facie transfer of cenvat credit available in EOU account to the DTA unit on debonding of EOU is permissible. It is further observed that inputs and capital goods on which credit was availed by EOU were further utilized in DTA unit and therefore they are eligible for credit. Ld. advocate contended that the amount in question is still lying in the books of account and therefore there is no reason for insisting for predeposit of the amount by way of cash - Following decision of Tecumseh Products India P. Ltd. Vs CC & C.E 2011 (3) TMI 632 - CESTAT, BANGALORE - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Maintainability of appeal against dismissal for non-compliance with stay order.
2. Transfer of credit from 100% EOU to DTA unit.
3. Decision on the appeal based on merit without predeposit.

Analysis:
1. The issue of maintainability of the appeal against dismissal for non-compliance with a stay order was raised by the Authorised Representative on behalf of Revenue. He argued that no appeal is maintainable before the Tribunal in such cases, citing relevant legal precedents. However, the Tribunal referred to a previous decision in the case of Girnar Transformers Pvt. Ltd. and concluded that an appeal dismissed by the Commissioner (Appeals) for non-compliance with a stay order is indeed maintainable before the Tribunal. The Tribunal distinguished the cases cited by the Authorised Representative and overruled the preliminary objection raised by him.

2. The appellant, engaged in manufacturing automobile parts, converted from a 100% EOU to a DTA unit and transferred an amount from the cenvat account of the EOU to the DTA unit. The adjudicating authority observed that there was no provision for such a transfer, leading to a demand for a predeposit of 50% of the duty. The Commissioner (Appeals) upheld this decision, leading to the dismissal of the appeal. The Tribunal, however, referred to a previous case involving a similar issue and held that the transfer of cenvat credit from the EOU to the DTA unit was permissible. Relying on this precedent, the Tribunal set aside the Commissioner (Appeals) order, remanding the matter for a decision on merit without insisting on any predeposit.

3. After considering the arguments from both sides and the precedents cited, the Tribunal found in favor of the appellant regarding the transfer of credit issue. The Tribunal set aside the order of the Commissioner (Appeals) and remanded the matter for a decision on merit without requiring any predeposit. The Tribunal also disposed of the stay application and allowed the appeal by way of remand, emphasizing the correctness of the appellant's position regarding the transfer of cenvat credit from the EOU to the DTA unit.