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TMI Blog2024 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, the department has adopted a wrong basis in denying a portion of the CENVAT credit to the appellant of the duty paid by 100% EOUs, on the ground that component of BCD and applicable EC SHEC on the BCD adopted in computing aggregate duties of Customs, which is nothing but Excise duty being not mentioned in Rule 3(1) of CCR, 2004, hence, not admissible. The said reasoning adopted by the Learned Commissioner in denying a portion of the duty as CENVAT credit cannot be sustained being contrary to the principle of law laid down in Vikram Ispat s case. Time Limitation - Suppression of facts or not - penalty - HELD THAT:- From the records of the case, it is clear that the appellants have been availing CENVAT credit on the duty paid by 100% EOU after duly reflecting the same in the relevant monthly ER-1 returns filed with the department periodically and the present demand relates to a portion of CENVAT credit held to be inadmissible. Thus, there are no merit in the allegation of the department that the appellant had suppressed availing of excess amount of CENVAT credit against the duty paid by 100% EOUs reflected in the invoices with an intend to evade payment of duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Excise Duty in terms of Notification No. 12/2012-CE dated 1.3.2012. However, the EOUs were required to pay appropriate Excise Duty in terms of proviso to Sectio 3(1) of the Central Excise Act, 1944, which is equal to the aggregate duties of customs calculated in terms of provisions of the Customs Act, 1962. He has submitted that Rule 3(7) of the CENVAT Credit Rules, 2004 prescribes quantum of CENVAT credit admissible in respect of inputs and capital goods cleared by an 100% EOU to a DTA unit. He has submitted that the learned Commissioner in the order has held that when provisions of Rule 3(7)(a) CENVAT Credit Rules, 2004 are not applicable to the facts of the present case, consequently Rule 3(1) of said Rules becomes applicable, where credit is allowed on the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985. The duty paid under proviso to Section 3(1) of the Central Excise Act, 1944 is an aggregate of the Basic Customs duty and Additional Customs duty, hence not covered under Rule 3(1) of CENVAT Credit Rules, 2004; Rule 3(1)(i) which governs availment of CENVAT credit read with proviso to Section 3(1) of the Central Excise Act, 1944 it is cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14-TIOL-1898-CESTAT-AHM and Jai Corporation Limited vs. CCE, Vapi: 2015 (317) ELT 489 (Tri.-Ahmd.). 5. The learned advocate further submitted that the show-cause notice issued on 14.3.2018 for recovery of the CENVAT credit availed during the period 2012-13 to 2014-15 is badly hit by limitation. He has submitted that the records of the appellant have been audited periodically by the Department for the entire disputed period and in support, he has referred to the final audit report No.122/2013 dated 17.6.2013 and 10.11.2016. Further, he has submitted that availing of CENVAT credit of the Excise duty paid by 100% EOU were recorded in their books of accounts and also periodical information reflected in monthly ER-1 returns and no facts have been concealed or suppressed from the knowledge of the department. Further, it is submitted that the appellants have followed the decision of the Larger Bench of the Tribunal in the case of Vikram Ispat (supra) and Molex (India) Pvt. Ltd. (supra) on the issue of admissibility of credit, hence, invoking of extended period in confirming the demand is bad in law. To support his argument, he relied upon the following decisions: CCE, Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 100% EOUs of iron ore, computed as per Notification No.23/2003-CE dated 31.3.2003 (Sl. No.4) and shown on the respective input invoices. The Revenue s objection is that since Rule 3(7) of the CENVAT Credit Rules, 2004 restricting the duty paid by an 100% EOU is not applicable in the present case, their case would fall under Rule 3(i) of the CENVAT Credit Rules, 2004. It is further objected that under Clause (vii) of the said Rule 3(i) of CENVAT Credit Rules, 2004, the additional duty of customs, if any, paid be equivalent to the duty of excise specified under Clause (i) (ii) (iii) (iv) (v) (vi) and (vi)(a) and in the present case, since the additional customs duty equivalent to countervailing duty (CVD) is nil, therefore the appellants are not entitled to avail CENVAT credit on the portion of Basic Customs Duty, Education Cess and Secondary Higher Education Cess availed cannot be allowed. Consequently, differential CENVAT credit of Rs.2,03,93,277/- attributable to Basic Customs Duty (BCD) and Education Cess (EC) and Secondary Higher Education Cess (SHEC) on the applicable BCD has been denied to the Appellant and its recovery with interest and penalty confirmed against the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975). 12. We find force in the contention of learned advocate for the appellant. The law is well settled by now that the duty paid by an 100% EOU is an Excise duty, though the measure adopted in computing the Excise duty is aggregate applicable duties of Customs, payable by a 100% EOU; it cannot be the criteria, in determining the nature of duty. The Larger Bench of the Tribunal in Vikram Ispat s case examined the controversy whether duty paid by an 100% EOU under proviso to Section 3(1) is an Excise duty or otherwise, observed as follows: 12. We have considered the submissions of all the sides. The concept of 100% E.O.U. was brought with an idea to increase the export from the country. These units were provided facilities, among other things, of importing capital goods raw materials, components, etc. without payment of customs duty and also to obtain similar goods from domestic market without payment of cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by itself make the levy a duty of excise. Again the Supreme Court in the case of U.O.I. v. Bombay Tyre International, supra, held that Section 3 of the Central Excise Act creates the charge and defines the nature of the charge that it is a levy on excisable goods, produced or manufactured in India. The levy of tax is defined by its nature, while the measure of the tax may be assessed by its own standard . The Supreme Court held that When enacting a measure to serve as standard assessing the levy the Legislature need not contour it along lines which spell out the character of the levy itself. In this case the Supreme Court did not accept the contention that because levy of excise is a levy on goods manufactured, the value of excisable goods must be limited to the manufacturing cost plus the manufacturing profit. We are, thus, in agreement with the learned Advocates that the duty which is levied on the goods manufactured and cleared by 100% E.O.Us to the Domestic Tariff Area is a duty of Excise and not a duty of Customs on account of a measure being the Customs duty provided in proviso to Section 3(1) of the Central Excise Act. (emphasis supplied) 13. In the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 20/- Value for the purpose of special additional duty if leviable = Rs. 100/- + Rs. 25/- + Rs. 20/- = Rs. 145/- special additional duty if leviable= 4% of Rs. 145/-= Rs. 5.8/- Total duty payable but for this exemption= Rs. 25/-+ Rs. 20/- + Rs. 5.80/-= Rs. 50.80/- 50% of aggregates of the duties of customs= 50% of Rs. 50.80/-= 25.40/- Duty required to be paid in accordance with this notification is Rs. 25.40/- provided it is not less than the duty of excise leviable on like goods produced or manufactured outside the oriented undertaking, etc. 2 3 Any Chapter All goods other than those referred to in Sr. Nos. 5, 6 and 7 of this Table. In excess of amount equal to aggregate of duties of excise leviable under Section 3 of the Central Excise Act or under any other law for the time being in force on like goods produced or manufactured in India other than in an export oriented undertaking, if sold in India. 3 4. Any Chapter All goods produced or manufactured wholly from the raw materials produced or manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clarified that the value of the goods shall be determined in terms of the section 4 of the Central Excise Act. 5 7 60 (i) Knitted or crocheted fabrics of cotton, whether or not processed; (ii) Knitted or crocheted fabrics of man-made fibres, not subjected to any process, In excess of amount equal to fifty per cent. of the aggregate duty, not reduced by any other notification: Provided that the fifty per cent. of the aggregate duty leviable on the goods shall be apportioned in the ratio 2:1 between the duty leviable under the said Central Excise Tariff Act and the said Additional Duties of Excise (Goods of Special Importance) Act. Explanation. - For removal of doubts, it is clarified that the value of the goods shall be determined in terms of the section 4 of the Central Excise Act. 5 14. A plain reading of the said Sl. No.4, it is clear that the circumstances and corresponding method of computation of duty and quantum required to be paid by an 100% EOU in DTA is different from the duty payable against Sl. No. 2 of the said Notification. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch inputs refers to the payment of (a) duty of excise under the Central Excise Act and (b) additional duty of excise under the Additional Duties of Excise (Textiles and Textile Articles) Act. If the Additional Customs duty leviable on like goods includes any other excise duty, such as duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the Modvat Credit will not be available in respect of such duty. 15. In the instant case, the department has adopted a wrong basis in denying a portion of the CENVAT credit to the appellant of the duty paid by 100% EOUs, on the ground that component of BCD and applicable EC SHEC on the BCD adopted in computing aggregate duties of Customs, which is nothing but Excise duty being not mentioned in Rule 3(1) of CCR, 2004, hence, not admissible. The said reasoning adopted by the Learned Commissioner in denying a portion of the duty as CENVAT credit cannot be sustained being contrary to the principle of law laid down in Vikram Ispat s case (supra). We find a somewhat similar view has been expressed in the judgment of Gopala Polyplast Ltd. s case (supra) cited by the learned advocate. 16. On the issue of limitation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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