2015 (6) TMI 506 - AT - Central Excise

Waiver of pre deposit - 100% EOU - CENVAT Credit - Held that - In terms of this proviso, though the excise duty paid by the 100% EOU on its DTA clearances, has a basic custom duty component also, the cenvat credit is admissible only of the Additional Customs Duty portion payable on the goods under section 3(1) of the Customs Tariff Act, 1975 plus the special additional customs duty payable under section 3(5) of the Customs Tariff Act and Secondary and Higher Education Cess. Thus the DTA unit would not be entitled for the cenvat credit of the basic custom duty. Thus, the appellant have not been able to establish a prima facie case in their favour. - Partial stay granted.

Summary

Issues:
1. Entitlement to cenvat credit of basic custom duty portion paid by 100% EOU.
2. Interpretation of 2nd proviso to Rule 3(7)(a) of the Cenvat Credit Rules 2004.
3. Prima facie case in favor of the appellant.

Analysis:
1. The appellant, a manufacturer of Cement and cement klinker, received Kemrock Pultruded Shapes from a 100% EOU. The dispute arose regarding the cenvat credit of the basic custom duty portion paid by the 100% EOU. The Department contended that the appellant is not entitled to the cenvat credit of the basic custom duty portion. The Jurisdictional Assistant Commissioner confirmed the cenvat credit demand against the appellant. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

2. The appellant argued that as per the 2nd proviso to Rule 3(7)(a) of the Cenvat Credit Rules 2004, the cenvat credit of the entire amount of central excise duty paid by the 100% EOU should be admissible. They cited a judgment in support of their argument. The Department opposed the stay application, citing a different Tribunal judgment and contending that the appellant did not have a prima facie case in their favor.

3. The Tribunal analyzed the proviso in question and concluded that the cenvat credit admissible to the DTA unit would only include the additional customs duty portion payable on the goods under the Customs Tariff Act, special additional customs duty, and education cess. The basic custom duty component paid by the 100% EOU was not eligible for cenvat credit. As the appellant failed to establish a prima facie case, they were directed to deposit a specified amount within a set timeframe. Compliance was required, failing which the pre-deposit of the remaining amount of cenvat credit demand, interest, and penalty would be enforced.