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2014 (10) TMI 409 - AT - Central Excise100% EOU - Disallowance of the credit of Education Cess and Secondary & Higher Secondary Cess as per the formula prescribed in Rule 3(7)of CENVAT Credit Rules, 2004 - Power of the commissioner of central excise (Appeals) to remand the matter appellants submits Commissioner does not have power to remand after amendment to Section 35A(3) of Central Excise Act, 1944 and therefore seeks remand the matter to Commissioner to hear the matter afresh and decide the issue in respect of remand - held that - issue already stands settled as per this Bench decision in the case of Bacha Motors (P) Ltd Vs. CST Ahmedabad 2010 (1) TMI 472 - KARNATAKA HIGH COURT . On merits of restriction of CENVAT Credit as per Rule 3(7)(a) of CENVAT Credit Rules, 2004, it is observed from the opening sentence of Rule 3(7)(a) that the provision will be applicable to the inputs or capital goods produced or manufactured by a 100% EOU. In the instant case, as borne out from the facts argued the disputed goods were not produced or manufactured by the appellant s 100% EOU. Otherwise also, CENVAT Credit of cesses have been held to be admissible as per the case laws relied upon by the appellant - Decided against Revenue.
Issues Involved:
1. Jurisdiction of Commissioner (Appeals) to remand a case and subsequent orders. 2. Disallowance of credit of Education Cess and Secondary & Higher Secondary Cess under Rule 3(7) of CENVAT Credit Rules, 2004. Issue 1: Jurisdiction of Commissioner (Appeals) to remand a case and subsequent orders: The Revenue filed Appeal No.E/288/2011-SM challenging the remand of a matter by the Commissioner (Appeals) to the adjudicating authority. The Revenue contended that the Commissioner had no power to remand any appeal based on a CBEC notification. Another appeal, E/10681/2013, was filed against the order passed by the adjudicating authority post-remand. The Revenue argued that both the adjudicating authority and the first appellate authority lacked jurisdiction while the appeal by the Revenue was pending before CESTAT. The Revenue sought to set aside the order sanctioning a refund of Rs. 32,42,385 with modifications. On the other hand, Appeal No.E/10765/2013 was filed by the appellant challenging the disallowance of credit of Education Cess and Secondary & Higher Secondary Cess under Rule 3(7) of CENVAT Credit Rules, 2004. Issue 2: Disallowance of credit of Education Cess and Secondary & Higher Secondary Cess under Rule 3(7) of CENVAT Credit Rules, 2004: The argument put forth by the Revenue, represented by Shri G.P. Thomas, was that the Commissioner (Appeals) lacked the authority to remand a case and that subsequent orders were improper. The Revenue supported the part of the first appellate authority's order that restricted the refund claim in accordance with Rule 3(7)(a) of the CENVAT Credit Rules, 2004. Conversely, the appellant, represented by Shri Mehul Jivani, contended that the restriction of CENVAT Credit under Rule 3(7)(a) was unjustified as the goods in question were not produced or manufactured by the appellant's 100% EOU. The appellant cited previous CESTAT decisions to support the admissibility of Education Cess credit. After hearing both sides and examining the case records, the Tribunal found that the restriction of CENVAT Credit under Rule 3(7)(a) applied to inputs or capital goods produced or manufactured by a 100% EOU. Since the disputed goods were not produced or manufactured by the appellant's 100% EOU, the restriction did not apply. Additionally, the Tribunal noted that CENVAT Credit of cesses had been deemed admissible based on the case laws referenced by the appellant. In conclusion, the Tribunal rejected the appeals filed by the Revenue and allowed the appeal filed by the appellant, providing consequential relief as necessary. The judgment clarified the jurisdiction of the Commissioner (Appeals) to remand cases and the eligibility of the appellant for CENVAT Credit concerning Education Cess and Secondary & Higher Secondary Cess under Rule 3(7) of the CENVAT Credit Rules, 2004.
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