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2019 (4) TMI 1197 - AT - Central Excise100% EOU - debonding of unit - CENVAT Credit - denial on the ground that since the goods were exempted under Notification No. 23/03-CE dated 31.03.2003 (Serial No.1) unconditionally, therefore, the appellant should not have paid the SAD and consequently they were not entitled for cenvat credit - HELD THAT - The appellant have admittedly paid the SAD without availing any exemption notification by virtue of Notification No. 19/03-Cus dated 01.03.2003, therefore, on this ground itself they are eligible for cenvat credit. Secondly, even if it is assumed that the goods is exempted under notification No. 23/03-CE, it has been held by the Coordinate Bench of this Tribunal in the case of CENTURY YARN VERSUS COMMISSIONER OF C. EX., INDORE 2011 (4) TMI 369 - CESTAT, NEW DELHI that Notification No. 23/03-CE is not applicable in the case of de-bonding, therefore, there is no question of applicability of Notification No. 23/03-CE. The appellant is entitled for SAD paid by them at the time of de-bonding - Appeal allowed - decided in favor of appellant.
Issues:
1. Applicability of Notification No. 23/03-CE dated 31.03.2003 on payment of Special Additional Duty (SAD) during de-bonding of 100% EOU. 2. Entitlement to cenvat credit on SAD paid during de-bonding. 3. Interpretation of exemption notifications in the context of de-bonding from 100% EOU status. Analysis: Issue 1: The appellant de-bonded their unit as a 100% Export Oriented Unit (EOU) and paid duty on all excisable and imported goods, including Special Additional Duty (SAD) under Notification No. 19/06-Cus dated 01.03.2006. The department contended that since the goods were exempted under Notification No. 23/03-CE dated 31.03.2003, the appellant should not have paid SAD. The appellant argued that they did not avail of the conditional Notification No. 23/03-CE during de-bonding and cited the decision in Century Yarn Vs. CCE, Indore 2011 (270) ELT 554 (Tri. Del.) to support their position. The Tribunal held that the appellant paid SAD without availing any exemption, making them eligible for cenvat credit. Additionally, the Tribunal ruled that Notification No. 23/03-CE is not applicable during de-bonding based on the Century Yarn case precedent. Issue 2: The appellant claimed cenvat credit on the SAD paid during de-bonding. The Tribunal found that since the appellant did not avail any exemption notification and paid SAD under Notification No. 19/03-Cus dated 01.03.2003, they were entitled to the cenvat credit. The Tribunal's decision was supported by the fact that the goods were not exempt under Notification No. 23/03-CE and the appellant's compliance with the relevant duty payment requirements. Issue 3: The interpretation of exemption notifications in the context of de-bonding from 100% EOU status was crucial in this case. The Tribunal analyzed the applicability of Notification No. 23/03-CE and its conditions, emphasizing that the appellant's payment of SAD without availing any exemption made them eligible for cenvat credit. By referencing the Century Yarn case, the Tribunal clarified that Notification No. 23/03-CE does not apply during de-bonding, reinforcing the appellant's entitlement to the SAD paid during the process. The Tribunal's decision set aside the Revenue's demand, allowing the appeal in favor of the appellant.
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