2019 (7) TMI 4 - AT - Central Excise

100% EOU - education cess and secondary and higher education cess - Rule 3(7)(a) of Cenvat Credit Rules, 2004 - HELD THAT - The issue has already been considered and laid to rest by many Co-ordinate Benches of the Tribunal and hence the same is no more res integra. In a recent decision, Ahmedabad Bench of the Tribunal in the case of M/S JINDAL SAW LTD. VERSUS COMMISSIONER (APPEALS-III) OF CENTRAL EXCISE RAJKOT 2018 (3) TMI 693 - CESTAT AHMEDABAD has held that Since the restriction under the said sub-rule (7) is worded in such a ways to restrict credit of Basic Customs Duty but allow credit of Additional Customs duty, the appellants are within their rights to take credit of an amount equivalent to the Additional Customs Duty inclusive of excise duty as well as the amount of cess on such excise duty. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of Cenvat credit for purchases from a 100% EOU
- Correctness of Cenvat credit taken for purchases from the 100% EOU
- Adjudication of excess Cenvat credit availed
- Appeal against the imposition of penalty

Analysis:

1. Availment of Cenvat credit for purchases from a 100% EOU:
The appellant, a 100% EOU engaged in manufacturing, availed Cenvat credit for various inputs, capital goods, and input services used in their final products. The jurisdictional officers questioned the correctness of the Cenvat credit taken for purchases made from Reliance Industries Limited (RIL), a 100% EOU. The dispute centered around whether the appellant should have taken Cenvat credit only as per the formula prescribed under Rule 3 (7) of the Cenvat Credit Rules, 2004. The Show Cause Notice issued sought recovery of the excess Cenvat credit availed.

2. Correctness of Cenvat credit taken for purchases from the 100% EOU:
The appellant contended that they were entitled to take credit of specified duties paid on inputs as per Rule 3 (1) of CCR. They argued that the restriction imposed by the authorities below for availment of Cenvat credit only to the extent of CVD components was incorrect and contrary to the provisions of CCR. The appellant's consultant cited various case laws to support their contentions regarding the admissibility of Cenvat credit for education cess and secondary education cess.

3. Adjudication of excess Cenvat credit availed:
The adjudicating authority confirmed an amount of excess credit availed along with interest and imposed a penalty under Rule 15 of CCR. The Commissioner (Appeals) upheld the order of the adjudicating authority to the extent of availment of excess CVD credit with interest but dropped the penalty. The appellant appealed against this decision before the forum.

4. Appeal against the imposition of penalty:
The appellant challenged the penalty imposed by the adjudicating authority. The Commissioner (Appeals) dropped the penalty but upheld the order regarding the excess CVD credit availed. The appellant sought intervention from the forum, arguing that the restriction imposed on availment of Cenvat credit was incorrect. The forum, after hearing both sides and considering relevant case laws, set aside the impugned order and allowed the appeal, granting consequential benefits as per law.

In conclusion, the judgment addressed the issues related to the availment of Cenvat credit for purchases from a 100% EOU, the correctness of the credit taken, the adjudication of excess credit availed, and the appeal against the penalty imposed. The forum set aside the impugned order, following established legal principles and case laws, and allowed the appeal with consequential benefits as per law.