2008 (9) TMI 351 - AT - Central Excise

Cenvat Credit Inputs Received from a 100% EOU Denial of Cenvat credit of education cess Held that - appellants are entitled to avail 100% credit of Education Cess on the goods supplied to them by a 100% EOU - The findings given by the Commissioner (A) is not legal and proper and the same is set aside by allowing the appeal with consequential relief.

Summary

Issues:
- Entitlement to Cenvat credit for Education Cess on inputs received from a 100% EOU unit.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore concerned the denial of Cenvat credit for Education Cess on inputs received from a 100% EOU unit. The Commissioner (A) had rejected the appeal, stating that the appellants were entitled to credit as per Rule 3(7)(a) of the Cenvat Credit Rules, 2004. However, the findings were deemed inadequate as they did not address the case's specific facts and submissions made by the assessee. The learned Cost Accountant referenced a Mumbai Bench case, Emcure Pharmaceuticals Ltd. v. CCE, Pune, where it was held that the assessee could claim Education Cess credit under Rule 3(7)(a) and Rule 3(7)(b) of the Cenvat Credit Rules. This decision was supported by the Larger Bench judgment in Das and Co. v. Collector and an Apex Court judgment in Jindal Poly Films Ltd. v. Commissioner. The Tribunal rejected the Revenue's argument that Rule 3(7)(a) overrides other provisions, emphasizing that a non-obstante clause is used only when contrary provisions exist. Therefore, the Tribunal concluded that the appellants were entitled to Education Cess credit, setting aside the Commissioner (A)'s decision and allowing the appeal.

The Tribunal's decision was based on the interpretation of Rule 3(7)(a) and Rule 3(7)(b) of the Cenvat Credit Rules. The Tribunal highlighted that Rule 3(1) applies to all manufacturers, including 100% EOU, while Rule 3(7)(b) allows the utilization of Cenvat credit for various purposes, including Education Cess. The Tribunal emphasized that if the Revenue's interpretation were correct, Rule 3(7)(b) would be redundant, which was not the intention of the legislation. By following legal precedents and the Mumbai Bench decision, the Tribunal concluded that the appellants were indeed eligible to claim 100% credit of Education Cess on goods supplied by a 100% EOU. The Tribunal deemed the Commissioner (A)'s findings inadequate and set them aside, granting consequential relief to the appellants.

In conclusion, the Tribunal's detailed analysis focused on the correct interpretation of the Cenvat Credit Rules in the context of Education Cess credit for inputs received from a 100% EOU unit. By considering legal precedents and the legislative intent behind the rules, the Tribunal ruled in favor of the appellants, allowing them to claim the full credit of Education Cess. The decision emphasized the importance of a thorough examination of the relevant provisions and legal principles to ensure the proper application of tax credit rules in such cases.