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TMI Blog2016 (5) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Anil Gidwani, Consultant For the Respondent: Shri Sameer Chitkara, A.R. (Additional Commissioner) ORDER PER: DR. D.M. MISRA This appeal is filed against the OIO No.19/Demand/Daman/ 2007, dt.27.12.2007, passed by the Commissioner of C.Ex. Customs, Daman, Vapi. 2. Briefly stated, the facts of the case are that the Appellant, an Export Oriented Unit (100% EOU), was earlier a DTA Unit and registered with the Central Excise Department in August 2005 for manufacturing of Excisable goods. They had applied to the Development Commissioner, Kandla for conversion of the DTA unit into an 100% EOU, accordingly, necessary permission was accorded to them in November, 2005. Later, they approached the Dy. Commissioner of C.Ex., Vapi for necessary licence under the Customs Act, 1962, which was granted to them. 2.1 The Appellant was later issued with a Show Cause Notice on 25.05.2007 for recovery of CENVAT Credit amounting to ₹ 66,43,536/- alleging irregular transfer of said credit from their existing DTA unit on conversion into 100% EOU. On adjudication, the said demand was confirmed, penalty of ₹ 7.00 lakh was imposed and recovery of interest was also direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgments cited by the Appellant, the said provisions of EXIM Policy was not considered and hence not applicable to the present case. 6. Heard both the sides and perused the records. The limited question of law needs to be addressed is: whether on conversion of DTA unit to an 100% EOU, the CENVAT Credit lying in balance at the time of conversion can be availed and utilized by the 100% EOU. In our opinion, the issue is no more res-integra and answered by the two leading judgments of the Tribunal. 7. In the case of Sun Pharmaceuticals Indus. Ltd (supra), the Appellant therein was the manufacturer of Pharmaceutical Products and Bulk Drugs and availed CENVAT Credit on various inputs during their operation as DTA unit. On conversion to 100% EOU, the Appellant availed the credit lying in balance amounting to ₹ 27,94,664/-. A Show Cause Notice cum and demand notice was issued for recovery of the said credit. On adjudication, the demand was confirmed penalty was also imposed. This Tribunal, interpreting the provisions as was in existence. Prior to the imposed amendment brought to the relevant Central Excise Rule, 2002, recorded its reasons as follows:- 7. In CCR-02, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for payment of duty on excisable goods removed to the DTA or for payment of duty on goods exported under claim for rebate. Also there exists no bar for a DTA unit carrying over inputs and the cenvat credit balance in its accounts when it got converted into an EOU. We also observe that this Tribunal in Waterbase Ltd. v. CCE, Guntur reported in 2005 (187) E.L.T. 346 (Tri. - Bang.) had made the following observations. 6. We have gone through the rival contentions. The appellants have informed their intention of taking Cenvat credit. The Department acknowledged the intimation sent by the appellants. In these circumstances, the appellants started taking credit. Therefore, there is no contumacious conduct on the part of the appellants warranting imposition of any penalty. Therefore the penalties imposed on the appellants and on Shri P. Ravi, General Manager are set aside. As regards the merits of the case, we find that there is no rule corresponding to the erstwhile Rule 100H of the Central Excise Rules, 1944. The interpretation that there is no prohibition for 100% E.O.U. to take Cenvat credit appears to be correct. However, in view of Rule 17 of the Central Excise Rules, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said DTA unit was converted to an 100% EOU w.e.f. 19.11.2004, the CENVAT Credit lying in balance amounting to ₹ 11,07,017/- was denied to them. While rejecting the Department s stand and observing that the CENVAT Credit lying in balance would be admissible to the converted 100% EOU the Tribunal held as:- 11. The issues to be decided are : (i) The entitlement of EOU to take balance of credit relating to inputs/capital goods lying in the Cenvat account of the DTA on the date of its conversion to EOU; and (ii) Amount of duty to be paid on removal of inputs as such. As regards issue at (i), we find that as held in Order-in-Appeal No. 92/06, Rule 10 of Cenvat Credit Rules, 2004 did not prohibit availing by EOU of the balance credit at the time of conversion of DTA. Rule 10 of CCR '04 dealt with transitional credit in situations such as shifting of factory or change in ownership or sale, merger or amalgamation or lease. The claim of the appellant that the credit balance available related to inputs received on or after 6-9-04 is not contested. In any case, no provisions prohibited an EOU from availing balance of credit when the unit converted to E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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