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2014 (7) TMI 618 - AT - Central ExciseWaiver of pre deposit - Duty demand - Notification No.22/09-CE (NT) dt. 7.9.2009 - Whether educational cess and secondary higher education cess availed on the inputs received from 100% EOU for the period from April 2009 to August 2009 should be allowed - Held that - Rule 3(7)(b) allows utilisation of Cenvat credit by all categories of manufacturers or producers of final products or providers of taxable services, including 100% EOU, in respect of AED for payment of AED, NCCD for payment of NCCD, education cess for payment of education cess, etc. Rule 3(7)(b) also opens with the non-obstante clause. Therefore, if the interpretation canvassed by the Revenue is accepted as correct, there would have been no question of utilisation of education cess for payment of education cess if the taking of the credit itself, according to the Revenue, is barred by Rule 3(7)(a), and the provisions of Rule 3(7)(b) would, therefore, be rendered redundant - predeposit of entire amount of duty along with interest and penalty is waived till disposal of appeals - Following decision of Emcure Pharmaceuticals ltd. Vs CCE Pune 2008 (1) TMI 147 - CESTAT, MUMBAI - Stay granted.
Issues:
1. Eligibility of availing educational cess and secondary higher education cess on inputs received from 100% EOU. 2. Compliance with Rule 3(7)(a) of Cenvat Credit Rules, 2004. 3. Interpretation of rules regarding utilization of Cenvat credit by 100% EOU. 4. Pre-deposit of duty, interest, and penalty. Issue 1: The case involved the eligibility of availing educational cess and secondary higher education cess on inputs received from 100% EOU. The applicants, engaged in manufacturing Polyester Staple Fibres, availed cenvat credit on such inputs. The dispute arose regarding the allowance of educational cess and secondary higher education cess for the period from April 2009 to August 2009. The adjudicating authority disallowed the amount, leading to appeals from both the Revenue and the appellant/assessee. The Commissioner (Appeals) rejected the appellant's appeal and allowed the Revenue's appeal partially by imposing a penalty. Issue 2: The main contention of the Revenue was the non-compliance with Rule 3(7)(a) of the Cenvat Credit Rules, 2004. The Revenue argued that the applicant failed to adhere to the provisions of this rule concerning the eligibility of credit on educational cess and higher secondary education cess. Referring to a Supreme Court decision, the Revenue emphasized the importance of strictly following procedural rules for availing benefits, similar to the SSI notification case. Issue 3: The Tribunal referred to a previous case involving Emcure Pharmaceuticals Ltd. where the appeal by the assessee was allowed on a similar issue. The Tribunal highlighted that Rule 3(7)(b) allows the utilization of Cenvat credit by all categories of manufacturers, including 100% EOU, for payment of various duties and cess. The Tribunal emphasized that if the interpretation suggested by the Revenue was accepted, it would render certain provisions redundant, as seen in the case of Turbo Energy Ltd. and CCE Daman Vs PVN Fabrics. Issue 4: Considering the discussions and precedents, the Tribunal granted unconditional stay on the issue, waiving the pre-deposit of the entire amount of duty along with interest and penalty until the disposal of the appeals. Both stay applications were allowed, providing relief to the appellant during the ongoing legal proceedings. In conclusion, the judgment addressed the issues related to the eligibility of availing educational cess and secondary higher education cess on inputs from 100% EOU, compliance with Cenvat Credit Rules, interpretation of rules for utilizing Cenvat credit by 100% EOU, and the pre-deposit of duty, interest, and penalty, providing detailed analysis and references to relevant legal precedents.
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