2018 (9) TMI 1125 - AT - Central Excise

Quantum of Cenvat credit admissible in respect of central excise duty paid by an 100% EOU claiming benefit of Sr. No. 2 of N/N. 23/2003-CE dated 31.03.2003 - Held that - Clause (a) of Sub- Rule 7 of Rule 3 of Cenvat Credit Rules, 2004 wherein there is a specific provision that if the Central Excise Duty is paid in terms of Sr. No. 2 of the Notification No. 23/2003-CE dated 31.03.2003 then the admissible Cenvat credit is 50% of X multiplies by (1 BCD/100) multiplied by (CVD/100) , where BCD and CVD denote ad valorem rates, in per cent, of basic customs duty and additional duty of customs leviable on the inputs and X denotes the assessable value. The authorities at lower level by resorting to said provision have correctly arrived at the conclusion that out of Cenvat credit of ₹ 1,21,28,954/- Cenvat credit of ₹ 69,85,771/- was not admissible to the appellants and also credit of ₹ 7,73,909/- was not admissible to the appellants - appeal dismissed - decided against appellant.

Summary

Issues:
Quantum of Cenvat credit admissible in respect of central excise duty paid by a 100% EOU claiming benefit of Sr. No. 2 of Notification No. 23/2003-CE dated 31.03.2003.

Analysis:
The case involved two appeals that were consolidated due to the same issue. The core issue revolved around determining the quantum of Cenvat credit allowable for central excise duty paid by a 100% EOU under Sr. No. 2 of Notification No. 23/2003-CE dated 31.03.2003. The appellants, engaged in manufacturing Pet Preforms, availed Cenvat credit on the entire central excise duty paid on inputs procured from a 100% EOU for the periods from February 2008 to December 2008 and January 2009 to September 2009.

During the proceedings, the Revenue proposed the recovery of irregularly availed Cenvat credit amounting to ?1,21,28,694 for the period from February 2008 to December 2008, and ?7,73,909 for the period from January 2009 to September 2009. The lower authorities confirmed a demand of ?69,85,771 out of the proposed denial for the first period and the entire amount for the second period. The authorities invoked Clause (a) of Sub-Rule 7 of Rule 3 of Cenvat Credit Rules, 2004, which specifies the admissible Cenvat credit calculation formula based on the provisions of Sr. No. 2 of the Notification No. 23/2003-CE dated 31.03.2003.

Ultimately, the Tribunal concluded that the lower authorities correctly determined that a portion of the Cenvat credit claimed by the appellants was not admissible. Specifically, out of the total Cenvat credit of ?1,21,28,954, ?69,85,771 was deemed inadmissible, along with the entire credit of ?7,73,909. The Tribunal found no merit in the appeals and dismissed both cases, upholding the decision of the lower authorities based on the provisions of the Cenvat Credit Rules, 2004 and the relevant notification.

In conclusion, the judgment clarified the calculation methodology for determining the admissible Cenvat credit in cases where central excise duty is paid by a 100% EOU under specific notifications. The decision highlighted the importance of adhering to the prescribed rules and notifications while claiming Cenvat credit, emphasizing the need for strict compliance with the provisions to avoid inadmissible credit claims.