9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 1379 - AT - Central Excise100% EOU - CENVAT credit of education cess as well as secondary and higher education cess paid on the basic excise duty - Rule 3 of CCR 2004 - Held that - Rule 3 of CCR 2004 specifically lists the duties that can be availed as credit. Though the aggregate of duties of customs is collected as an amorphous duty of excise the specific reference to the Central Excise Tariff Act 1985 in the rule excludes the availment of the totality of excise duty paid by Export Oriented Units as credit - The availment of credit to the extent specified in the notice issued to the appellant is incorrect and the impugned order is correct in law. Penalty - Held that - the availment of ineligible credit had arisen from apparent confusion about the nature and composition of the levy - availment does not appear to have been motivated by intent to evade duties - penalty set aside. Appeal allowed - decided partly in favor of appellant.
Issues:
Challenge to disallowance of CENVAT credit of education cess, secondary & higher education cess on domestic clearance by 100% Export Oriented Unit. Analysis: 1. The appeal challenged the order disallowing CENVAT credit of education cess and secondary & higher education cess on domestic clearance. The original authority and first appellate authority did not accept the contention that the CENVAT credit was in accordance with rule 3 of CENVAT Credit Rules, 2004. 2. The issue revolved around the eligibility for CENVAT credit of cess by a customer of a 100% Export Oriented Unit. The order distinguished between basic customs duty and additional duty equivalent to central excise duties for computation of duties on goods cleared into the domestic tariff area (DTA), limiting CENVAT credit to central excise duties and cess thereof. 3. The duty liability for goods cleared by a 100% Export Oriented Unit includes basic customs duty, additional duties of customs (equivalent excise duty), and other leviable cess. The scheme aims to prevent cascading taxation effects on goods transferred in commerce channels as if goods were imported into India. 4. The CENVAT credit scheme intends to prevent taxation cascading effects on goods/services. Duties liable under relevant laws up to the place of removal can be availed as credit. The domestic clearance taxation by Export Oriented Units aggregates all duties burdened on similar goods upon import into India. 5. The appellant availed CENVAT credit of duties included in input prices from Export Oriented Units. The revenue objected to credit of cess paid, citing the proviso to rule 3(7) of CENVAT Credit Rules, 2004 as the basis for disallowance. 6. The appellant argued that duty on domestic clearances by Export Oriented Units, being an aggregate of customs duties and excise duty with cess, should be eligible for credit. Legal precedents were cited to support this argument. 7. Rule 3 of CENVAT Credit Rules, 2004 specifies duties eligible for credit, excluding the total excise duty paid by Export Oriented Units. The proviso in rule 3(7) confirms ineligibility of credit for cess included in total excise duty on clearances from Export Oriented Units. 8. The confusion regarding levy nature and composition led to the inadvertent availment of ineligible credit. Tribunal decisions supporting credit eligibility may have contributed to appellant's belief. The absence of intent to evade duties made the penalty imposition inappropriate. 9. The penalty was set aside, and the appeal allowed to that limited extent.
|
