2017 (2) TMI 1066 - AT - Central Excise

100% EOU - CENVAT credit - demand on the ground that excess credit availed on education cess and SHEC - Held that - in the judgement of Tribunal in the case of M/s Emcure Pharmaceuticals Ltd 2008 (1) TMI 147 - CESTAT, MUMBAI , it has been categorically observed that the respondent are eligible to avail CENVAT credit on Education Cess and Secondary Higher Education Cess, after interpreting the relevant Rule 3 (7) (a) of CCR, 2004 - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues: Appeal against demand notice for recovery of inadmissible credit on CENVAT. Interpretation of Rule 3(7)(a) of CCR, 2004 regarding eligibility for availing Education Cess and Secondary Higher Cess credit.

Analysis:
1. The appeal was filed against OIA No. SKSS/213/DMN/NDMN/2010-11 dated 02/11/2010 by the Commissioner (Appeals) of Central Excise, Customs and Service Tax-DAMAN. The Respondent, a 100% EOU engaged in manufacturing, availed CENVAT credit on inputs, specifically P & P Granules, leading to a demand notice for recovery of inadmissible credit totaling &8377; 13,33,687. The Ld. Commissioner (Appeals) confirmed part of the demand, and the Revenue appealed against the decision.

2. The Revenue argued that Rule 3(7)(a) of CCR, 2004 restricts the credit of Education Cess and Secondary Higher Cess to a proportionate amount applicable to inputs and capital goods. They contended that the credit should be limited in relation to inputs and capital goods, including Education Cess and Secondary & Higher Education Cess. The Revenue sought to infer that these cesses should be considered while calculating the admissible credit from an EOU.

3. The Respondent, represented by Ld. Advocate Shri S. J. Vyas, relied on a previous Tribunal decision and contended that they are entitled to full credit of Education Cess and Higher Secondary Education Cess. Referring to the case of Emcure Pharmaceuticals Ltd and interpreting Cenvat Credit Rules, 2004, it was argued that proportionate credit only applies to CVD and BCD, not to Education Cess and Secondary Higher Cess.

4. The Member (Judicial) noted that previous Tribunal judgments, including the case of M/s Emcure Pharmaceuticals Ltd and the Respondent's own case, established the eligibility of availing CENVAT credit on Education Cess and Secondary Higher Education Cess. No contrary decision was presented by the Revenue. Consequently, the Member upheld the impugned order, rejecting the Revenue's appeal as lacking merit. The appeal was disposed of accordingly.