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Issues Involved: Appeal against Order-in-Original disallowing Cenvat credit for 100% E.O.U., imposition of penalties u/r Central Excise Rules, 2001/2002.
Summary: The appellants, a 100% E.O.U., filed appeals against the Order-in-Original disallowing Cenvat credit under Rule 17 of the Central Excise Rules, 2001-2002. The Commissioner demanded duty and imposed penalties on the appellants and the General Manager. The appellants challenged these findings. The appellants expressed their intention to avail Cenvat credit after the introduction of Cenvat Credit Rules, 2001. The Revenue issued a show cause notice for disallowing the credit under Rule 17. The Commissioner disallowed the credit, demanded duty, and imposed penalties on the appellants and the General Manager. The appellants contended that there was no specific prohibition on taking Cenvat credit for 100% E.O.U. under the new rules. They requested the Bench to set aside the Commissioner's order. The Revenue argued that Rule 17 required a 100% E.O.U. unit to pay duty through account current when clearing to Domestic Tariff Area (DTA). They claimed that the Order-in-Original was legal and requested the Bench to uphold it. After considering the arguments, it was found that the appellants had informed the Department of their intention to take Cenvat credit, and there was no contumacious conduct warranting penalties. However, as per Rule 17, a 100% E.O.U. should pay duty through account current, not Cenvat credit. Therefore, the demand for duty was confirmed, penalties were set aside, but interest under Section 11AB was upheld. The appeals were disposed of with the above terms on 16-6-2005.
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