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TMI Blog2025 (1) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... ocated at village-Lodriyal in Taluka-Sanand of Ahmedabad District. The above referred factory was allowed to operate as a 100% Export Oriented Undertaking by virtue of a Letter of Permission (LOP) No. KASEZ/100% EOU/II/945/2000-01 dated 30.03.2002 issued by the office of the Development Commissioner, Kandla Special Economic Zone. 3.2. The Central Government issued a Notification under Section 5A of the Central Excise Act, 1944 read with Section 3 of the Additional Duties of Excise (GSI) Act, 1957 and Section 3 of the Additional Duties of Excise (TTA) Act, thereby exempting the goods specified in Annexure-l to the Notification from whole of the excise duty as well as additional duties when brought in connection with the manufacture and packaging of articles or job work for export goods into EOUs, subject to various conditions laid down under the Notification. 3.3 One of the conditions of the Notification is that the EOU should execute a Bond with the Deputy/Assistant Commissioner of Central Excise thereby agreeing to various undertakings, including an undertaking to pay an amount equal to the duty leviable on the goods and the interest in case of capital goods as well as goods oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Credit Rules and asked the Petitioner Company to pay amount equal to excise duty on the depreciated value of capital goods and also on the value of other goods like inputs and packaging materials in cash, and not from Cenvat account; and the Respondent No. 2 also informed the Petitioner Company that the duties so paid could be availed as Cenvat credit by the Petitioner Company. 3.9. The Petitioner Company replied to the Respondent No. 2 by correspondence dated 12.8.2015 pointing out that an EOU procuring goods duty free from domestic manufacturers stepped into the shoes of such manufacturer, and therefore when the EOU was required to pay excise duty on such goods in eventualities like debonding, the EOU could discharge such duty liability in the same manner which was permissible to the manufacturer of such goods for discharging duty liability. Whereas in case of imported goods, the EOU was required to pay custom duties in the same manner (i.e. cash) that had to be adopted by an importer. 3.10 The petitioners have also brought to the notice of the respondent Excise authorities specific cases of debonding permitted to EOUs belonging to manufacturers like M/s. Alps Chemicals Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat balance lying with the Petitioner Company. Thus, the petitioner -Company would suffer liquidity crunch on one hand if the above amount of Rs. 61,46,661/- is paid in cash, whereas such amount would remain as idle Cenvat credit with the petitioner-Company on the other hand; and thus a serious prejudice of financial difficulty and liquidity crunch would be caused to the petitioners if the direction of the Respondent No. 2 for payment of duty leviable on the goods in question in cash is not set right. 3.14 The Petitioners therefore submit that the action of the Respondent No. 2 had caused irreparable injury and loss to the petitioners, and the balance of convenience is also in favour of the Petitioners in this case. Therefore, appropriate orders, directions or writ may be issued by this Hon'ble Court so as to set right the above referred situation that has occurred in the present case. 4. This petition is thus filed under Article 226 of the Constitution of India with a prayer to quash and set aside the direction to pay excise duty in cash conveyed by the respondent No. 2 vide letters No. F.No. VIII/48-08/Cus/Dishman/13-14 dated 3.8.2015 and 19.8.2015 thereby, allowing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner, Central Excise, Division-II, Ahmedabad addressed to the Deputy Development Commissioner in connection with the request for "No Due Certificate" for debonding of Exit out of 100% EOU Scheme by one M/s Alps Chemicals Pvt. Ltd., which clearly shows that the said unit has been permitted to discharge excise duty for indigenously procured duty paid raw materials lying in stock in their factory from the Cenvat credit account. In paragraphs 9 and 14 of the memorandum of petition, the petitioners have clearly stated the names of various parties in whose cases the Ahmedabad Commissionerate has permitted payment of excise duty from the Cenvat credit account. The petitioners have also stated that all over the country, EOUs are permitted to discharge the central excise duty foregone from the Cenvat credit account. Thus, on the ground of parity alone, the petitioners have made out a strong prima facie case, inasmuch as, when similarly situated assessees have been permitted to pay the excise duty foregone from the Cenvat credit account, there is no reason as to why the petitioners should be denied such benefit. Besides, the petitioner company is a reputed well established Pharmaceuti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the petitioners has submitted that the petitioners have brought to the notice of the excise authorities numerous cases of debonding permitted to EOUs. It was specifically submitted that an EOU is also manufacturer and all the benefits allowed to manufacturers are admissible to an EOU at the time of debonding and therefore, an EOU is allowed to avail Cenvat credit on capital goods, inputs and taxable services and must also consequently, be allowed to utilize duly availed Cenvat credit for discharging liabilities of the excise duty foregone on duty free procurement. 8. Learned advocate Mr. Dipak Kanchadani appearing for the respondent has submitted as under:- 8.1 Present writ petition under Article 226 of the Constitution of India is premature as the petitioners were issued a speaking order which was appealable in nature, therefore, the petitioners must be relegated to avail the alternative remedy. 8.2 Secondly, the issue that arises in the present case is that of debonding whereas the judgements cited by the petitioners pertain to the manner of payment of duty and therefore not applicable in the facts of the present case. 8.3 Thirdly, Mr. Khanchandani, learned advocate for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... communication dated 19.8.2015 (impugned), the said representation came to be rejected. The petitioners therefore, challenged the aforesaid two communications dated 03.08.2015 and 19.8.2015 by way of present writ petition. 10. Partial debonding of an unit from the existing EOU is permissible under EOU Scheme, inasmuch as, there is no bar to such debonding, that has been brought to the notice of this Court. 10.1 In case of Eicher Motors Ltd. [1999 (106) ELT 3(SC)], it has been held by the Hon'ble Supreme Court as under :- "5. Rule 57-F(4-A) was introduced into the Rules pursuant to the Budget for 1995-96 providing for lapsing of credit lying unutilised on 16-3-1995 with a manufacturer of tractors falling under Heading No. 87.01 or motor vehicles falling under Heading Nos. 87.02 and 87.04 or chassis of such motor vehicles under Heading No. 87.06. However, credit taken on inputs which were lying in the factory on 16-3-1995 either as parts or contained in finished products lying in stock on 16-3-1995 was allowed. Prior to the 1995-96 Budget, the Central excise/additional duty of customs paid on inputs was allowed as credit for payment of excise duty on the final products, in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit has become absolute at any rate when the input is used in the manufacture of the final product. The basic postulate that the Scheme is merely being altered and, therefore, does not have any retrospective or retroactive effect, submitted on behalf of the State, does not appeal to us. As pointed out by us that when on the strength of the Rules available, certain acts have been done by the parties concerned, incidents following thereto must take place in accordance with the Scheme under which the duty had been paid on the manufactured products and if such a situation is sought to be altered, necessarily it follows that the right, which had accrued to a party such as the availability of a scheme, is affected and, in particular, it loses sight of the fact that the provision for facility of credit is as good as tax paid till tax is adjusted on future goods on the basis of the several commitments which would have been made by the assesses concerned. Therefore, the Scheme sought to be introduced cannot be made applicable to the goods which had already come into existence in respect of which the earlier Scheme was applied under which the assessees had availed of the credit facility for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled 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 been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. It is, therefore, that in the case of Eicher Motors Ltd. vs. Union of India [1999(106) ELT 3] this Court said that a credit under the MODVAT scheme was as good as tax paid 10.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of rule 8 of the Central Excise Rules, 2002, shall be rendered invalid. 11. Rule 3(4) of the Cenvat Credit Rules was an enabling provision for utilization of Cenvat credit. This Court has held in CCE Vs. Shilpa Copper Wire Industries reported in 2011(269) ELT 17 (Guj.) that there is no difference between 100% export oriented unit and a normal DTA Unit as regards the Cenvat scheme. 12. During the pendency of the aforesaid petition, the Goods and Service Tax Act, 2017 has come into force from July, 2017. 13. After the GST regime has come into force, the underlying scheme of availing Cenvat credit for payment of duties has been continued in Chapter XX -Transitional provisions. Section 142(6)(a) of the Central Goods and Service Tax Act, 2017 reads as under:- "(6) (a) every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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