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2016 (11) TMI 1164 - AT - Central ExciseMODVAT credit - credit lying unutilized in DTA units on the date of conversion of the unit into an EOU - Circular No. 77/99-Cus dt. 18/11/1999 - Held that - The issue that poses for consideration is no longer res integra as pointed out by the learned counsel for the appellant. In the case of Sun Pharmaceuticals India Ltd. Vs. CCE, Pondicherry 2009 (5) TMI 849 - CESTAT CHENNAI , the Tribunal has held that It is clarified that if the DTA unit has availed of the modvat credit on plant, machinery and equipment and also utilized such credit for payment of duty on goods manufactured and cleared before its conversion into EOU/EHTP/STP, the same is not required to be demanded on its conversion into EOU/EHTP/STP. However, if the Modvat credit so availed of is lying in balance flux as unutilized on the date of conversion into EOU/EHTP/STP, it would lapse on conversion of DTA unit into EOU/EHTP/STP unit and cannot be utilized after such conversion. Appeal dismissed - decided against Department.
Issues:
Challenge to CENVAT credit on capital goods and inputs post conversion from DTA to EOU. Analysis: The Department appealed against the Commissioner(Appeals) decision allowing the respondent's CENVAT credit post conversion from DTA to EOU. The Department argued based on Circular No. 77/99-Cus, stating that MODVAT credit on capital goods or inputs unused in DTA units during the conversion to EOU is not permissible. The respondent's counsel countered citing changes in Central Excise legislation, highlighting the absence of provisions in the new Central Excise Rules 2001/2002 akin to Rule 100H of the erstwhile Central Excise Rules 1944. The counsel referenced the Tribunal's judgment in S Pharmaceuticals India Ltd. Vs. CCE, Pondicherry [2010(251) ELT 312 (Tri. Chennai)] to support their stance. The Tribunal deliberated on the issue, noting that the matter is no longer res integra based on precedents like Sun Pharmaceuticals India Ltd. case. It was observed that under CCR'02 or CCR'04, there are no restrictions on EOU's entitlement to CENVAT credit for excise duty paid on received inputs. The Tribunal highlighted the rescission of CER'44 and the absence of similar provisions in CCR '01 or CCR '02. The Tribunal emphasized the transitional provisions in CER'01 and CER'02, stating that circulars like Circular No. 77/99 dated 18-11-99 are no longer valid due to the rescission of CER'44. Consequently, the Tribunal found no fault in the appealed decision and dismissed the Department's appeal, aligning with the principles established in previous judgments. The ruling emphasized the evolution in Central Excise Rules and the inapplicability of Circular No. 77/99 dated 18-11-99 in the current legal framework, leading to the dismissal of the Department's challenge to the CENVAT credit post conversion from DTA to EOU.
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