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TMI Blog2020 (2) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... ules operate in different spheres and do not overlap. In the present case, the Appellants received the inputs when the final product was dutiable, on its exemption, chose to clear the inputs lying in stock as such following the procedure laid down in Rule 3(5) of CENVAT Credit Rules, 2004 without its use in the manufacture of exempted final product - If the argument of the Revenue is accepted that the credit attributable to the inputs lying in stock would lapse, then the Appellants would be required to clear the inputs as such either without payment of duty or reversal of credit again on the same quantity of inputs on its clearance as such which would lead to an absurd situation and it cannot be intended by the legislature. Therefore, clearance of the inputs lying in stock as on 01.03.2007, after reversal of the credit following the procedure laid down under Rule 3(5) of CENVAT Credit Rules, 2004 is in harmony with Rule 11(3) of CENVAT Credit Rules, 2004 and not in conflict - Hence, reversal of credit on the inputs cleared as such, is in accordance with the law. Whether 100% EOU unit is entitled to refund the accumulated CENVAT Credit of ₹ 78,97,716/- under Rule 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudication. In the de-novo adjudication, the Adjudicating Authority reduced the demand to ₹ 85,55,251/- with interest and penalty. Hence, the present appeal. In Appeal No.E/1781/2011, cash refund claim filed by the Appellant (EOU) under Rule 5 of CENVAT Credit Rules, 2004 for ₹ 78,97,716/- was rejected on the ground that the credit was availed by the EOU unit on the goods received from the DTA unit, by reversing/payment of duty through CENVAT Credit which was not admissible to the said DTA unit on inputs cleared as such. 3. The learned Advocate for the Appellant submits that the DTA unit of the Appellant was setup on 06.04.2006 where various dutiable finished goods including Optical Disc Drive (ODD) had been manufactured after availing appropriate CENVAT Credit of duty paid on inputs, capital goods and input services which were used in the manufacture of finished goods. The DTA unit was clearing ODD in the domestic market on payment of duty and clearing for export under bond as well as under claim for rebate. The Appellant 100% EOU unit was set up on 22.03.2007. He has submitted that w.e.f. 01.03.2007, the ODD became unconditionally exempt by virtue of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Rules 2004 is unsustainable in law. With regard to the confirmation of demand of ₹ 52,60,795/- on the inputs received during March 2007 under Rule 6(1) of CENVAT Credit Rules 2004, the learned Advocate has submitted that the said Rule would not apply to the clearance of inputs as such to DTA unit in view of the provisions contained under Rule 6(6)(ii) of CENVAT Credit Rules 2004. Therefore, the demand of ₹ 52,60,795/- is also not maintainable. Since the CENVAT Credit has been correctly availed by the 100% EOU unit on the inputs cleared as such by the DTA unit, therefore, the cash refund of accumulated CENVAT Credit amounting to ₹ 78,97,716/- is admissible to them. 5. The learned A.R. for the Revenue reiterates the findings of the learned Commissioner. He has vehemently argued that in view of the clear wordings contained in Rule 11(3)(ii) of CENVAT Credit Rules 2004, the Appellant is required to reverse the CENVAT Credit in stock as on the date when the finished product became unconditionally exempted under Section 5(A) of Central Excise Act, 1944. Also, supporting the findings of the Adjudicating authority, the learned A.R. for the Revenue has submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock, if, - (i) ... (ii) the said final product has been exempted absolutely under Section 5A of the Act, and after deducting the said amount from the balance of CENVAT Credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilised for payment of duty or any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported. Rule 3(5) of CENVAT Credit Rules, 2004 (5) When inputs of capital goods, on which CENVAT Credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 9. 8. On plain reading of the Rule 11(3), it is clear that the manufacturer of a final product shall be required to pay an amount equivalent to the CENVAT Credit taken by him in respect of the inputs received for use in the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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