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TMI Blog2023 (6) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... CHENNAI ], the Tribunal held that at the material time the CER or CCR did not contain any provision barring the 100% EOUs from availing cenvat credit or utilizing the same 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. Following the ratio laid down by the judgments above, which is squarely applicable to the facts of the case, it is held that the demand cannot sustain. The impugned order is set aside - appeal allowed. - Excise Appeal No. 41806 of 2013 - Final Order No. 40401/2023 - Dated:- 5-6-2023 - Hon ble Ms. Sulekha Beevi C. S., Member ( Judicial ) And Hon ble Shri M. Ajit Kumar , Member ( Technical ) Shri S. Muthuvenkataraman , Advocate for the Appellant Smt. K. Komathi , ADC ( AR ) for the Respondent ORDER Per Ms. Sulekha Beevi C. S. Brief facts of the case are that the appellant is engaged in the manufacture of hydraulic cylinders and pars. They are availing CENVAT credit on inputs, capital goods and input services. M/s. WIPR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The decision of the Tribunal in the case of Sun Pharmaceuticals Industries Ltd. Vs. CCE reported in 2010 (251) ELT 312 (Tri. Chennai) was relied by the learned counsel to submit that the very same issue was considered by the Tribunal and held that the credit so transferred is not against the provisions of law. The said decision was rendered by the Tribunal following the Larger Bench decision of the Tribunal in the case of CCE, Rajkot Vs. Ashok Iron and Steel Fabricators reported in 2002 (140) ELT 277 (Tri. LB) wherein it was held that the statute provides for reversal of CENVAT credit only in the case where the credit has been illegally or irregularly taken . In the present case, department does not dispute that the credit availed by the EOU is not admissible. The transfer of the credit to the DTA unit after merger being eligible credit has to be allowed. 4. The appellant submitted that the issue as to whether the accumulated credit of the debonding unit can be carried forward to the DTA unit was considered by the Tribunal in the case of Technocraft Industries (India) Ltd. Vs. CCE, Thane reported in 2019 (369) ELT 1144 (Tri. Mum.) which has addressed the situation. The dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ownership of capital goods, inputs etc. as per sub-rule (3) of Rule 10 of CENVAT Credit Rules, 2004, the CENVAT credit can be transferred. It is thus alleged that as there is no transfer of capital goods / inputs as required under the sub-rule (3) of Rule 10 and the CENVAT credit lying unutilized in the accounts of the earlier EOU cannot be transferred to the merged DTA Unit. We do not find anything in Rule 10 which disallows transfer of CENVAT credit in the manner alleged by department. So also there is no dispute that the credit availed by the EOU which has been transferred is ineligible. The very same issue was considered by the Tribunal in the case of Technocraft Industries (supra). The relevant portion of the order is as follows:- 1. M/s. Technocraft Industries (India) Ltd. operated two facilities under the 100% Export Oriented Unit scheme in the Foreign Trade Policy notified by the Director General of Foreign Trade under the Foreign Trade (Development Regulation) Act, 1992. Both units opted out of the scheme and, upon debonding on 29th September, 2008 and 29th January, 2009 respectively, had balances of Rs. 93,64,988 and Rs. 1,33,38,504 in their Cenvat credit account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ultimate consumer, i.e. non-assessee, and all assessees in the production chain merely collect the duty for remitting to the government. At the same time, excise duties are limited to the contribution made to the manufacture of any goods; this requires that, for the proper administration thereof, each stage in the manufacturing process should be entitled to disassociate itself from the duties discharged upto the immediately preceding for computation of excise liability. Thus the full burden of duty should, without the privilege of passing on, be borne by the first non-assessee in the chain of transactions. The input credit scheme is devised towards that end and embodied as the Cenvat Credit Rules, 2004. Denial of Cenvat credit accumulated from duties discharged on procurements employed in exported goods would, therefore, load the burden on the exporter which defeats the very premise that is contained in the Cenvat Credit Rules, 2004. 8. As pointed out in the impugned order, the provisions of Rule 10 or Rule 11 will not apply to debonding units. It is also patently clear that a similar provision has not been explicitly incorporated in the Cenvat Credit Rules, 2004 for such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 duty should be paid by a 100% E.O.U. only through account current. Account current refers to PLA. In view of this position, the appellant cannot pay duty through Cenvat credit. In that case, the appellant will not be in a position to utilize the Cenvat credit at all and it does not make any sense to allow him to take credit. The inconsistency between 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Tecumseh Products India P.Ltd Vs CC,CE ST, Hyderabad-IV 2016 (336) ELT 685 (Tri-Bang.) iii) John Deere India Pvt. Ltd Vs CCE, Pune-III 2015 (326) ELT 205 (Tri-Mumbai) iv) CCE, Thane-I Vs Sequent Scientific Ltd 2018 (4) TMI 590 CESTAT Mumbai 4. The learned A.R. for the Revenue reiterates the findings of the learned Commissioner (Appeals). 5. We have carefully considered the submissions advanced by both sides and perused the records. The short point involved in the present appeal for consideration is whether CENVAT Credit lying in balance in the books of account of 100% EOU as on the date of de- bonding, could be transferred to the DTA unit. We find that the issue has been considered by this Tribunal in series of judgments viz. Technocraft Industries (India) Ltd Vs CCE (supra), Tecumseh Products India P.Ltd Vs CC,CE ST (supra), Hyderabad-IV, John Deere India Pvt. Ltd Vs CCE(supra), Pune-III and CCE, Thane-I Vs Sequent Scientific Ltd(supra). It has been consistently held by the Tribunal in all these cases that the CENVAT Credit lying in balance as on the date of de-bonding of 100% EOU and conversion to DTA unit, could be transferred to the DTA unit and be ut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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