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2014 (6) TMI 685 - AT - Central ExciseReversal of CENVAT Credit - Supply of goods to 100% EOU without payment of duty - deemed export - Whether the capital goods can be removed without reversing the CENVAT credit to an EOU unit availing the benefit of Notification No. 22/2003-CE - Held that - Commissioner (Appeals) has rightly relied upon the circular issued by the Board wherein it has been clarified that inputs can be considered as excisable goods and clearance of the same can be placed on par with clearance of excisable goods. Even though Rule 19(2) of Central Excise Rules was not cited nor discussed by any of the lower authorities, I still feel that also will be relevant. According to Rule 19(2) of Central Excise Rules, any materials can be cleared without payment of duty by a manufacturer for export. Provisions of Rule 19(2) which provide for clearance of goods without payment of duty irrespective of the fact that they were manufactured by the assessee or otherwise in my opinion would cover the issue in favour of the appellant. Further another point which was submitted by the learned counsel for the respondent that would be relevant is that after 2004, 100% EOU was eligible for the CENVAT credit. Therefore even if the assessee were to reverse the CENVAT credit the receiving unit would have taken the credit and if they could not utilize the same for payment of duty they could have claimed refund - Following decision of Solectron Centum Electronics Ltd. 2008 (11) TMI 538 - CESTAT, NEW DELHI - Decided against Revenue.
Issues:
1. Reversal of CENVAT credit on inputs cleared without further processing to 100% EOU based on CT-3 certificate. 2. Applicability of Tribunal decisions and Board's instructions. 3. Interpretation of CENVAT Credit Rules and Rule 19(2) of Central Excise Rules. 4. Impact of the decision of the Larger Bench and High Court rulings on the case. 5. Revenue neutrality and invocation of the extended period for demand. Analysis: 1. The case involved a dispute regarding the reversal of CENVAT credit amounting to Rs. 32,23,689/- on inputs cleared by a DTA unit to a 100% EOU without payment of duty based on CT-3 certificate. The original adjudicating authority confirmed the demand, which was set aside by the Commissioner (Appeals), leading to the Revenue's appeal. 2. The Appellant argued that the Commissioner (Appeals) erred in relying on previous Tribunal decisions and Board's instructions, contending that the provisions of CENVAT Credit Rules mandate the reversal of credit before such clearances. Reference was made to the decision of the Larger Bench to support this argument. 3. The Respondent's advocate countered by citing a Tribunal case and a High Court ruling, emphasizing that the benefit of Notification No. 22/2003 CE applied to clearances of capital goods without payment of duty to a 100% EOU. This argument challenged the applicability of the Larger Bench decision in the case. 4. The Judge analyzed the submissions and concluded that the decision of the High Court, upholding the Tribunal's ruling on the clearance of capital goods, was applicable to the case at hand. The objections raised by the Appellant were dismissed, emphasizing the similarity in treatment between imported and domestically procured goods. 5. The Judge further discussed the revenue neutrality aspect, highlighting that the situation did not provide any undue benefit to the Assessee at the Revenue's expense. The relevance of Rule 19(2) of Central Excise Rules and the availability of CENVAT credit to the 100% EOU post-2004 were also considered. The Judge found the appeal filed by the Revenue lacked merit, especially on the grounds of limitation, and thus rejected it. This comprehensive analysis of the judgment delves into the key issues surrounding the reversal of CENVAT credit on input clearances to 100% EOU, the conflicting interpretations of relevant rules and decisions, and the determination of revenue neutrality in the context of the case.
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