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TMI Blog2015 (10) TMI 2508X X X X Extracts X X X X X X X X Extracts X X X X ..... ress was placed at its disposal for use in production. Prior to conversion on 1st September 2004, the assessee had utilised the entire credit available in the CENVAT Credit account for discharge of excise duty liability. 3. The case of Revenue was that, though CENVAT Credit was taken on the entire raw material procured by it, usage of a part of it by the 100% Export Oriented Unit after 1st September 2004 was tantamount to removal and non-utilisation for manufacture of excisable goods; such removal should have been preceded by reversal of the credit taken on such goods. Hence, the assessee was held liable to duty equivalent to the CENVAT Credit that had been wrongly availed in contravention of Rule 2(g) of CENVAT Credit Rules, 2002. It is that finding of the original authority that was set aside in the impugned order which is the subject of this appeal. 4. Revenue contends that the raw materials had not been used in manufacture of excisable goods by the manufacturing unit that procured them and availed CENVAT Credit thereon, that reliance placed by the first appellate authority on Jamna Auto Industries Limited v Commissioner of Central Excise, Indore [2001(130) ELT 181 (Tri-Del)], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch less removal of raw materials. Hence, the provision of CENVAT Credit Rules cited by the original authority to confirm the demand is clearly inapplicable. 9. The Tribunal in re Sandoz Pvt Ltd, taking note of identical submissions canvassed on behalf of Revenue in near-identical circumstances and placing reliance on Sun Pharmaceutical Industries v Commissioner of Central Excise, Pondicherry [2010 (251) ELT 312 (Tri-Chennai)], set aside the demand for duty equivalent to CENVAT Credit availed by the assessee before the undertaking was converted as a Export Oriented Unit observing that: "3. However, the learned DR submitted that the decision cited by the learned counsel are not applicable to the facts of this case. He submitted that, during the relevant time, the appellant was not allowed to utilise the CENVAT credit for payment of duty in respect of their clearance to DTA unit. When CENVAT credit cannot be utilised for the purpose of paying duty in respect of DTA clearance, such credit available in the books of account would be utilised by the 100% EOU. Further, the very fact that when utilization is not permitted it means availment is also not permitted. He submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to the effect that any circulars, instructions, orders, trading notices or other orders issued under the CER'44 superseded by CER'01, or such orders etc issued under CER'01 superseded by CER'02, by the Board, and in force on the date the erstwhile rules were rescinded shall, to the extent they are relevant and consistent with the new set of rules shall be deemed to be valid. CBEC Circular No. 77/99-Cus dated 18.11.99 is reproduced below:- "Paragraph 9.28 of the EXIM Policy, 1997-2002 provides that existing DTA units may also apply for conversion into an EOU/EHTP/STP, but no concession in duties and taxes would be available under the scheme for plant, machinery and equipment already installed. In this connection, instances have come to the notice of the Board that such units on their conversion into EOUs have been asked to reverse the Modvat credit already availed of, on plant and machinery procured by them prior to their conversion into EOUs. 2. The matter has been examined. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en Cenvat Rules and Central Excise Rules can be removed only by the legislature. As such in view of the Rule 17 of the Central Excise Rules, the appellant cannot avail the credit taken by him for payment of duty in respect of clearance to DTA. Therefore, the demand of duty only is confirmed. As already stated, the penalties are set aside. However the demand of interest under Section 11AB is upheld." The CBEC has since made good the deficiency in the rules noted by the Tribunal by providing for the EOUs to utilize the cenvat credit. In CCE Rajkot Vs. Ashok Iron and Steel Fabricators reported in 2002 (140) ELT 277 (Tri.-LB) = (2002-TIOL-274-CESTAT-DEL-LB cited by the Ld. Counsel for the appellants, this Tribunal held as follows:- "a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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