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2014 (11) TMI 307 - AT - Central ExciseWaiver of pre-deposit - 100% EOU - Denial of cenat credit after debonding of the unit - amount was paid at the time of de bonding - Held that - Appellants are registered as an 100% EOU for manufacture of Carbon Brushes falling under Chapter Sub-heading 8545 2000 of the Central Excise Tariff Act, 1985. On perusal of the final exit order dated 23.02.2012 issued by the Deputy Commissioner of Central Excise, MEPZ Special Economic Zone and HEOUs, Chennai, that after obtaining no due certificate from the Deputy Commissioner of Central Excise that they have remitted all the dues, the Development Commissioner has allowed for the final exit from 100% EOU status. We also find that the appellants discharged appropriate duties on the stock of inputs lying and on the capital goods and availed credit as they continued as DTA unit in the same premises. first proviso to Sub-rue (1) of Rule 3, stipulates that the credit should be allowed on the duty paid on the capital goods at the time of de-bonding of the unit and in terms of para-8 of Notification No. 22/2003. Prima facie, the applicant has made out a strong case for waiver of pre-deposit relates to the interpretation of Cenvat Credit Rules and the proviso for availing cenvat credit on the capital goods at the time of de-bonding - Stay granted.
Issues:
Waiver of pre-deposit of demand of Cenvat Credit, interest, and penalty against the impugned Order No. 16/2013 dated 10.12.2013. Analysis: Issue 1: Cenvat Credit Availment The applicant sought waiver of pre-deposit for demand of Cenvat Credit, interest, and penalty arising from the impugned order by the Commissioner of Central Excise, Chennai-II. The case involved the interpretation of Rule 3 and Rule 9 of the Cenvat Credit Rules regarding the denial of Cenvat Credit availed on excise duty paid on inputs and capital goods at the time of de-bonding from 100% EOU status to a DTA unit. The applicant argued that the First Proviso to Rule 3 (1) only limits credit on capital goods de-bonded under specific conditions and not on imported or indigenous goods. The applicant relied on precedents and circulars to support their contention. Issue 2: Interpretation of Cenvat Credit Rules The Revenue, represented by the Ld. AR, supported the adjudicating authority's decision to disallow the credit based on the first proviso to Rule 3 (1) of the Cenvat Credit Rules. The proviso specified conditions for availing Cenvat Credit on duty paid on capital goods during de-bonding. The Revenue argued that the proviso restricted credit to the duty paid on capital goods at the time of de-bonding as per Notification No. 22/2003. Judgment: Upon review, the Tribunal found that the appellants, after transitioning from 100% EOU to DTA unit, had paid appropriate duties on stock of inputs and capital goods and continued manufacturing activities. Rule 3 (1) of the Cenvat Credit Rules allows credit on excise duty and other listed duties, with the first proviso specifying conditions for credit on duty paid on capital goods during de-bonding. The Tribunal acknowledged the strong case made by the applicant regarding the interpretation of Cenvat Credit Rules and the proviso. Consequently, the Tribunal granted full waiver of pre-deposit for the demand of Cenvat Credit, interest, and penalty, staying recovery until appeal disposal. In conclusion, the judgment favored the applicant's argument, emphasizing the eligibility for Cenvat Credit on duty paid goods during the transition from EOU to DTA unit and the need for a detailed examination during the appeal hearing.
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