2007 (10) TMI 102 - AT - Customs

Assessee (100% EOU) is eligible to avail the credit of amount of duty paid on indigenously procured capital goods on debonding himself to DTA Revenue s appeal rejected.

Summary

Issues:
Whether the appellant, after debonding from EOU to DTA, is eligible to avail the credit of duty paid on indigenously procured capital goods.

Analysis:
The case revolves around the eligibility of the appellant to avail the credit of the duty paid on capital goods after debonding from an EOU to DTA. The Ld. Commissioner (Appeals) considered the submissions and records, concluding that the appellant is entitled to the Cenvat credit of Central Excise duty paid at the time of debonding. The Commissioner emphasized that the disputed amount, being equal to excise duty, is eligible for credit based on relevant provisions such as Notification No. 22/2003-C.E. and other policy documents. The Commissioner referred to Circular No. 185/19/96-CX, clarifying that credit can be allowed for the amount equal to Central Excise duty paid during debonding. The Commissioner highlighted that the debonding amount should be treated as payment of excise duty, supporting the appellant's claim for credit.

The Ld. SDR, however, contended that the appellant can only take credit for the duty paid as CVD if applicable on imported goods. Since the appellant did not pay CVD or other duties on imported goods in this case, the SDR argued against allowing the credit. Nonetheless, the Commissioner (Appeals) found in favor of the appellant, setting aside the order-in-original. The decision was supported by a Division Bench judgment reported at 2007 (210) ELT 241 (Tri-Bang.), reinforcing the entitlement of the appellant to the credit of Central Excise duty paid during debonding.

In the final analysis, the Member (J) of the Appellate Tribunal upheld the decision of the Ld. Commissioner (Appeals), stating that the impugned order is correct and does not warrant any interference. Consequently, the appeal filed by the revenue was rejected, affirming the appellant's right to avail the credit of Central Excise duty paid during the debonding process from EOU to DTA.