2017 (3) TMI 7 - AT - Central Excise

Cenvat credit - 100% EOU - Held that - I am of the view that the impugned order is not sustainable in law because the Commissioner (A) firstly has travelled beyond the scope of show-cause notice because in the show-cause notice the proposal was to deny CENVAT credit on Sl. No. 3 and 4 of the table whereas the Commissioner (A) has held that appellants are not entitled to credit availed at Sl. No.1, 5 and 6 of the said table which is not the issue raised in the show-cause notice. I also find that the Order-in-Original is liable to be upheld as the appeal filed by the department and the Order-in-Appeal have confirmed the findings of the Order-in-Original because in the impugned order the Commissioner (A) has agreed that appellant is eligible for CVD and EC and SHE cess i.e. Sl. No. 3 3, 01, 788/- - Appeal allowed.

Summary

Issues:
Appeal against Commissioner (A) order allowing department appeal and setting aside Order-in-Original regarding CENVAT credit on duty paid invoices by 100% EOU.

Analysis:
The case involved the appellant, a manufacturer of organic chemicals and pharmaceutical products, availing CENVAT credit under CENVAT Credit Rules (CCR), 2004. The issue arose during verification when it was found that the appellant had availed CENVAT credit on duty paid invoices from a 100% EOU, which included Education Cess and SHE Cess on customs duty and CVD. A show-cause notice was issued proposing to deny credit on Education Cess and SHE cess on the aggregate of duties. The Assistant Commissioner initially allowed the credit availed on CVD, but the department appealed, leading to the Commissioner (A) setting aside the Order-in-Original. The appellant challenged this decision in the present appeal.

The appellant argued that the Commissioner (A) erred in ignoring CENVAT Credit provisions and relevant tribunal judgments. They contended that as a DTA unit procuring goods from an EOU, they were eligible for CENVAT credit based on specific duty rates and clearances after a certain date. The appellant claimed credit on specific duties as per the rules, citing the Proviso to Rule 3(7) of the CCR, 2004. They emphasized that the Commissioner (A) misconstrued the issue of credit eligibility on certain duties paid by the EOU, which the appellant had rightfully claimed.

In response, the AR supported the findings of the impugned order, maintaining the department's stance on the matter. However, upon reviewing the submissions and records, the tribunal found the impugned order unsustainable in law. The tribunal noted that the Commissioner (A) exceeded the scope of the show-cause notice by addressing issues not raised therein. Additionally, the tribunal upheld the Order-in-Original, as it confirmed the appellant's eligibility for specific credits, contrary to the Commissioner (A)'s decision. Consequently, the tribunal set aside the impugned order and upheld the Order-in-Original, allowing the appeal with any consequential relief.

In conclusion, the tribunal's detailed analysis focused on the procedural errors in the Commissioner (A)'s decision, the correct application of CENVAT credit rules, and the appellant's eligibility for specific credits as per the law and relevant provisions. The judgment clarified the issues raised, the arguments presented by both parties, and ultimately, the tribunal's decision in favor of the appellant.