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TMI Blog2019 (8) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee on such De-bonding on 23.2.2012, however, not adopting the procedure for payment through TR 6 Challan Forms. A careful reading of Rule 3 would establish that the purpose of giving Cenvat Credit for which various Duties paid as enumerated in 11 Clauses of Rule 3 is to give set off for the Duties paid on Inputs or Inputs Services including the Duties, Taxes or Cess as enumerated in 11 Clauses is to remove the cascading effect of duties which concept is at the bottom of Cenvat Credit Rules 2004. The whole of the Rule 3(1) is the enabling provision for giving such Cenvat Credit and the Proviso therein inserted later on by Notification No.35 of 2008 dated 24.9.2008 cannot be said to be a stand alone enabling power to provide such Cenvat Credit to the Assessee. Such a novel and out of context interpretation of the said Proviso, which, we feel is not only not happily worded, but also, placed at the wrong place in Rule 3(1), cannot be accepted to defeat the very purpose of Rule 3(1) upon an 100 EOU, when converted upon De-bonding to a DTA. There is no dispute or quarrel on the legal proposition on how to interpret a later on inserted Proviso in an enactment. But, what we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in terms of para 8 of Notification No.22/2003 dated 31.3.2003. 4. The Tribunal, by its impugned order, upheld the order passed by the Adjudicating Authority and held against the Assessee that the Assessee was not so entitled to avail the benefit of Cenvat Credit under Rule 3(1) of Cenvat Credit Rules 2004. Aggrieved by the same, the Assessees have preferred the aforesaid two Appeals before this court. 5. Mr.Arvind P.Datar, learned Senior Counsel appearing for the Assessee in C.M.A.No.2280 of 2017 and Mr.M.Karthikeyan, learned counsel appearing for the Assessee in C.M.A.No.3023 of 2017 have submitted that Rule 3 of the Cenvat Rules 2004 allows the Manufacturer to take the Cenvat Credit in respect of 11 types of Duties including Excise Duties specified in the first Schedule to the Excise Tariff Act, Additional Excise Duty, Additional Excise Duty under Section 3 of the Exempted Tariff Act (Countervailing), Service Tax, Education Cess, etc and when such Duties are paid upon Debonding by a 100% EOU converted into a DTA, such Duties paid on Input or Capital Goods are eligible for Cenvat Credit against Output Tax liability of the Assessee. The learned Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit can be availed only subject to fulfilment of conditions for allowing the same and that requires the filing of the prescribed documents including the proof of payment in the prescribed Challan TR6 Form, which was not produced in the instant case and therefore, also, the Tribunal was justified in denying the Cenvat Credit to the Assessee. This submission is controverted by Appellant/Assessee in their written submission by saying that such payments were made only through Challan in TR6 Forms upon De-bonding. 7. We have heard the learned counsel on both the sides and perused the relevant statutory provisions and case laws cited in the Bar. In our clear and considered opinion, the present Appeals of the Assessees deserve to be allowed. The reasons are as follows. 8. Rule 3 of the Cenvat Rules, 2004 to the relevant extent, is quoted below for ready reference:- RULE 3. CENVAT credit. - (1) A manufacturer or producer of final products or a provider of taxable service] shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - (i) the duty of excise specified in the First Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004); [(xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and] [(xi) the additional duty of excise leviable under [section 85 of Finance Act, 2005 (18 of 2005),]] : [ Provided that the CENVAT Credit shall be allowed to be taken of the amount equal to central excise duty paid on the capital goods at the time of debonding of the unit in terms of the para 8 of notification No.22/2003-Central Excise, published in the Gazette of India, part II, Section 3, sub-section (i), vide number G.S.R.265(E), dated 31st March, 2003.] (This Proviso was inserted by Notification No.35/2008 CE(NT) dated 24.9.2008) paid on- (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer of final product or by the provider of output services on or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 100% EOU Assessee at the relevant point of time, were admittedly paid by Assessee on 23.12.2002 when, it appears that it became a Domestic Tariff Area (DTA) Unit. 11. There is also no dispute that the Duties in question were paid by the Assessee on such De-bonding on 23.2.2012, however, not adopting the procedure for payment through TR 6 Challan Forms. A careful reading of Rule 3 would establish that the purpose of giving Cenvat Credit for which various Duties paid as enumerated in 11 Clauses of Rule 3 is to give set off for the Duties paid on Inputs or Inputs Services including the Duties, Taxes or Cess as enumerated in 11 Clauses is to remove the cascading effect of duties which concept is at the bottom of Cenvat Credit Rules 2004. 12. We are of the opinion that the insertion of the Proviso which is below the 11 clauses of Rule 3(1) is also a Draftsman's slip and error as the said Proviso appears to be more in the form of an Explanation which was inserted later on with effect from 24.9.2008 and not to curtail the benefit of Cenvat Credit, but to clarify the situation that the Cenvat Credit should be allowed in respect of Duties paid on Input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a novel and out of context interpretation of the said Proviso, which, we feel is not only not happily worded, but also, placed at the wrong place in Rule 3(1), cannot be accepted to defeat the very purpose of Rule 3(1) upon an 100 EOU, when converted upon De-bonding to a DTA. 15. The view of Bombay Bench of Tribunal in this regard in the case of Commissioner of Central Excise, Pune v. Rajdhani Fab. Pvt. Ltd. (2008 (221) ELT 435 by a short order, as approved by the Bombay High Court by dismissal of the Appeal is opportune to quote here:- This appeal is directed against the order-in-appeal No.PII/KS/303/2006 dated 17.11.2006. 2. Considered the submissions made by both sides and perused the records. 3. The issue involved in this case is whether the appellant after debonding himself from EOU to DTA is eligible to avail the credit of the amount of duty paid on indigenously procured capital goods or not. 4. Ld. Commissioner (Appeals) while holding in favour of the respondents came to the following finding:- I have carefully gone through the records of the case and considered the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the issue is squarely covered by the decisions of the Division Bench as reported at 2007 (210) E.L.T. 241)(Tri.Bang.) in favour of the respondent. 6. Accordingly, I find that the impugned order is correct and does not require any interference. The appeal filed by the revenue is rejected. Order of Bombay High Court (News Report published in ELT) Cenvat/Modvat credit of duty paid by EOU while debonding The Bombay High Court Bench comprising Hon'ble Mr.Justice D.K.Deshmukh and Hon'ble Mr.Justice J.P.Devadhar on 24.9.2008 rejected the Central Excise Appeal No.176 of 2008 filed by Commissioner of Central Excise, Pune-II against the CESTAT Final Order No.A/1530/2007-WZB/C-IV (SMB), dated 26.10.2007 as reported in 2008 (221) E.L.T. 435 (Tri-Mum.) (Commissioner v. Rajdhani Fab. Pvt. Ltd.) . While rejecting the appeal, the High Court passed the following order : It is clear from the record that at the time of debonding, amount equal to excise duty was paid by the respondent and, therefore, after debonding the appellant would be entitled to avail credit of that amount. The learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain specified rates. The terms of this resolution give rise to some questions, but the assessment on the Appellants was not challenged by them before their Lordships on the ground that there had been no effective resolution to levy property tax. It will be observed that under Section 81(2) the property tax, save as otherwise provided in the Act, is to be levied at a percentage of the annual value of lands or buildings or both. Sub-section (3) otherwise provides inasmuch as it permits, but does not enjoin, the levying of the tax in the case of lands which are not used exclusively for agricultural purposes and are not occupied by or adjacent and appurtenant to buildings either at a percentage of the capital value of such lands or at such rates with reference to the extent of such lands as the Municipal Council may fix, subject to compliance with the proviso to the sub-section. If either of the alternative methods permitted by Sub-section (3), is adopted, the assessment is not on annual value. Appropriate as this sub-section was to the case of the Appellants' lands, the respondents did not in fact avail themselves of it in making the assessment complained of. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so can have no repercussion on the interpretation of the main enactment, so as to exclude from it by implication what clearly falls within its express terms. 17. Both the learned counsels in their additional Written Submissions and compilation of case laws have referred to the recent decision of Hon'ble Supreme Court in the case of Bhaskar Shrachi Alloys Ltd. v. Damodar Valley Corporation ((2018) 8 SCC 281) and an earlier decision in S.Sundaram Pillai v. V.R.Pattabi Raman (1985 (1) SCC 551) and have sought to rely upon them. Therefore, the relevant extract from these two Judgments are also quoted below:- Bhaskar Shrachi Alloys Ltd case:- Held, the latter part of the fourth proviso to S.14 of Electricity Act i.e. ... and the provisions of the Damodar Valley Corporation Act, 1948 insofar as they are not inconsistent with the provisions of this Act, shall continue to apply to that Corporation... , is a substantive provision to lay down something more than what a proviso generally deals with and is to bring in the continued application of some of the provisions of the 1948 Act which are not inconsistent with the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the section, the whole of it must be read, and a consistent meaning if possible given to every part of it. The words are: ... provided that such licence shall be granted only for premises situate in the ward or district electoral division in which such increase in population has taken place... . There seems to be no doubt that the words such increase in population refer to the increase of not less than 25 per cent of the population mentioned in the opening words of the section. 36. While interpreting a proviso care must be taken that it is used to remove special cases from the general enactment and provide for them separately. 37. In short, generally speaking, a proviso is intended to limit the enacted provision so as to except something which would have otherwise been within it or in some measure to modify the enacting clause. Sometimes a proviso may be embedded in the main provision and becomes an integral part of it so as to amount to a substantive provision itself. 18. There is no dispute or quarrel on the legal proposition on how to interpret a later on inserted Proviso in an enactment. Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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