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2014 (11) TMI 30 - AT - Central ExciseCENVAT Credit - Whether appellant is eligible to take CENVAT credit under Rule 3(1) of the Cenvat Credit Rules, 2004 for the entire duty paid by a 100% EOU under proviso to Section 3(1) of the Central Excise Act, 1944 - Held that - If the view put forth by the Revenue is accepted than under proviso to Section 3(1) no duty more than the duty of excise leviable under the First Schedule to Central Excise Act can be recovered from a 100% EOU. Revenue can take not one stand while recovering duties and take another stand once it comes to taking of CENVAT credit. It is, therefore, a logical conclusion that the sum total of duties paid by a 100% EOU represents Central Excise duty chargeable as per Section 3(1) of the Central Excise Act, 1944. In the invoices the entire duty has been shown as excise duty paid under proviso to Section 3(1) of the Central Excise Act, 1944. This proviso is existing in Section 3 right from 01.3.1982. Duty indicated on the invoices show the same to be Central Excise duty though the method used for calculating the measure of such excise duty also include elements of customs duties. Therefore, the entire duty paid on the invoices will have to be considered as Central Excise duty paid under Section 3(1) of the Central Excise Act, 1944. It is not the case of the Revenue in these proceedings that CENVAT credit of the excise duty paid by the 100% EOU was required to be reduced under any other provisions of the Cenvat Credit Rules, 2004 - Decided in favour of assessee.
Issues Involved:
1. Eligibility of CENVAT credit under Rule 3(1) of the Cenvat Credit Rules, 2004. 2. Interpretation of duty paid by a 100% EOU under proviso to Section 3(1) of the Central Excise Act, 1944. 3. Applicability of penalty and interest. Detailed Analysis: 1. Eligibility of CENVAT Credit under Rule 3(1): The primary issue is whether the appellant is eligible to take CENVAT credit for the entire duty paid by a 100% Export-Oriented Unit (EOU) under the proviso to Section 3(1) of the Central Excise Act, 1944. The appellant argued that the invoices from the 100% EOU indicated excise duty paid as per the proviso to Section 3(1) and that this should be fully creditable under Rule 3(1)(i) of the Cenvat Credit Rules, 2004. The appellant contended that the methodology for calculating the measure of tax does not change the nature of the duty as excise duty. The Revenue, however, argued that the duties paid included elements of Basic Customs duty and Cess, which are not eligible for CENVAT credit under Rule 3(1). The Revenue's stance was that only duties paid under the First Schedule to the Central Excise Tariff Act, 1985, are creditable. 2. Interpretation of Duty Paid by a 100% EOU: The appellant relied on several case laws, including *Amtek Audio Limited*, *Suresh Synthetics*, and *Kumar Arch Tech Pvt. Limited*, to support their argument that the cumulative duties paid under the proviso to Section 3(1) should be considered Central Excise duty. The adjudicating authority had agreed that the duty paid by a 100% EOU on DTA clearance represents duties of excise but held that credit of such duties is not admissible under Rule 3(1). The tribunal observed that the duty paid on the invoices should be considered as Central Excise duty, even if the measure of such duty includes elements of customs duties. The tribunal referenced the judgment in *CCE vs. H.K. Moulders* and *Amtek Auto Limited vs. CCE, Delhi*, which supported the view that the duty paid by a 100% EOU is excise duty and not customs duty, thus eligible for CENVAT credit. 3. Applicability of Penalty and Interest: The appellant argued that no penalty and interest should be attracted in this case, citing case laws such as *Bill Forge Pvt. Limited*, *Pearl Insulation Limited*, and *Balrampur Chini Mills Limited*. The tribunal did not specifically address the penalty and interest in the final judgment, focusing instead on the eligibility of the CENVAT credit. Conclusion: The tribunal concluded that the entire duty paid on the invoices should be considered as Central Excise duty under Section 3(1) of the Central Excise Act, 1944. The appeal filed by the appellant was allowed, and the tribunal held that the appellant is entitled to the CENVAT credit of the excise duty paid by the 100% EOU. The tribunal emphasized that the Revenue cannot take inconsistent stands regarding the recovery of duties and the eligibility for CENVAT credit. The order was pronounced in favor of the appellant on 25.09.2014.
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