2017 (7) TMI 268 - AT - Central Excise

CENVAT credit - inputs removed to 100% EOU - Revenue authorities were of the view that appellant should have reversed Cenvat Credit on the inputs which were removed to 100% EOU - Held that - similar issue decided in appellant s own case Commissioner of Central Excise, Customs and Service Tax - HYDERABAD-I Versus MATRIX LABORATORIES LTD. 2014 (6) TMI 685 - CESTAT BANGALORE , where it was held that According to Rule 19(2) of Central Excise Rules, any materials can be cleared without payment of duty by a manufacturer for export. Provisions of Rule 19(2) which provide for clearance of goods without payment of duty irrespective of the fact that they were manufactured by the assessee or otherwise in my opinion would cover the issue in favor of the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether duty paid inputs removed to a 100% EOU without reversing Cenvat Credit necessitate duty reversal?
2. Whether the decision of the Tribunal and High Court in a similar case involving the same appellant is applicable?

Analysis:
Issue 1:
The appeal concerned the removal of duty paid inputs from a DTA unit to a 100% EOU without reversing the Cenvat Credit. The Revenue authorities contended that the appellant should have reversed the credit on such inputs. The Tribunal noted that a similar issue involving the same appellant had been decided previously. In that case, it was held that no duty needed to be reversed on inputs cleared to a 100% EOU. The Tribunal referred to the decision and reasoning in the earlier case, emphasizing that the treatment regarding clearance to an EOU should be similar for both capital goods and inputs. The Tribunal also considered relevant provisions like Rule 19(2) of the Central Excise Rules and the revenue neutrality of the situation. It was concluded that the appellant had a strong case, and the demand was not sustainable. The Tribunal found that the impugned order necessitating duty reversal was unsustainable, following the precedent set by the High Court.

Issue 2:
The Tribunal recognized that the Hon'ble High Court of Andhra Pradesh had upheld the decision in the earlier case involving the same appellant. Considering the identical issue and the precedent set by the High Court, the Tribunal held that the impugned order was unsustainable and set it aside, allowing the appeal with consequential reliefs. The Tribunal's decision was based on the consistency of the legal interpretation and application of rules in similar cases involving the same appellant, as upheld by the High Court. The Tribunal's ruling was in line with the legal principles established in the previous judgment and the subsequent High Court validation, ensuring a fair and consistent application of the law in such matters.