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2019 (5) TMI 585 - AT - Central ExciseCENVAT Credit - Debonding of unit - Credit on the duty paid on capital goods received under Notification No. 22/2003-CE dated 31.03.2003 and Notification No. 52/2003-Cus. dated 31.03.2003 at the time of de-bonding allowed or not - HELD THAT - Board has issued Circular No. 185/19/96/CX dated 19.03.1996 wherein it was clarified that the assessee would be eligible for availing credit on the CVD paid at the time of de-bonding on the capital goods which are imported. The Tribunal in the case of COMMISSIONER OF C. EX., PUNE VERSUS RAJDHANI FAB. PVT. LTD. 2007 (10) TMI 102 - CESTAT, MUMBAI had occasion to analyze the issue of the credit availed on Excise Duty paid on indigenous capital goods before the amendment was brought forth to Rule 3(1) by adding the proviso. In the said decision, the Tribunal had held that the Board Circular clarifies with regard to the eligibility of credit on the CVD paid on imported capital goods. Thus, the credit availed for the balance 50% in the subsequent period is in order - appeal allowed - decided in favor of appellant.
Issues:
- Interpretation of Rule 3(1) of the CENVAT Credit Rules, 2004 regarding availing credit on duty paid on capital goods at the time of de-bonding. - Eligibility of credit on Central Value Duty (CVD) paid on imported capital goods under Notification No. 52/2003-Cus. - Validity of TR-6 challans for availing CENVAT credit. - Applicability of Board Circular No. 185/19/96/CX dated 19.03.1996 in determining credit eligibility. - Consistency in judicial decisions regarding credit on imported capital goods. Analysis: 1. The case involved a dispute over the appellant's availing of CENVAT credit on duty paid on capital goods at the time of de-bonding their 100% Export Oriented Unit (EOU) and converting it into Domestic Tariff Area (DTA) status. The Department contended that Rule 3(1) of the CENVAT Credit Rules, 2004 did not permit credit on duty paid under Notification No. 52/2003-Cus. The Commissioner and Commissioner (Appeals) upheld the demand, interest, and penalty imposed by the Original Authority. 2. The appellant argued that a previous Show Cause Notice had addressed the issue of availing credit on imported capital goods, which was partially allowed by the Tribunal in a prior order. The appellant cited Board Circular No. 185/19/96/CX dated 19.03.1996, which clarified eligibility for credit on Central Excise Duty paid on imported capital goods at the time of de-bonding. 3. The appellant relied on the decision in the case of Commissioner of C.Ex., Pune Vs. M/s. Rajdhani Fab Pvt. Ltd., where the Tribunal and the High Court upheld the credit eligibility on indigenous capital goods. The appellant contended that even though Rule 3(1) did not mention Notification No. 52/2003-Cus, the Board Circular and judicial precedents supported the credit claim. 4. The Department argued that Rule 3(1) only mentioned Notification No. 22/2003, which pertained to indigenous capital goods, not imported capital goods. However, the Tribunal noted that a previous order had allowed the appellant's credit claim on imported capital goods, and no appeal had been filed by the Department against that decision. 5. The Tribunal, considering the previous order and the Board Circular, held in favor of the appellant, allowing the credit availed on imported capital goods. The Tribunal emphasized the relevance of the Board Circular in determining credit eligibility, even if specific notifications were not mentioned in Rule 3(1). 6. Ultimately, the Tribunal set aside the impugned order, allowing the appeal with consequential reliefs, based on the consistency in the interpretation of credit eligibility on imported capital goods as per the Board Circular and previous judicial decisions.
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