TMI Blog2010 (3) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 31-3-2010 - D.A. Mehta and H.N. Devani, JJ. REPRESENTED BY : Ms. Amee Yajnik, Senior Standing Counsel, for the Appellant. None, for the Respondent. [Judgment per : H.N. Devani, J. (Oral)]. In this appeal under Section 35G of the Central Excise Act, 1944 (the Act), the appellant-revenue has challenged the order dated 22nd July 2008 [2008 (232) E.L.T. 703 (Tribunal)] made by the Customs, Excise Service Tax Appellate Tribunal (the Tribunal), by proposing the following question : Whether in the facts and circumstances of the case, the Tribunal is justified in determining the quantum of credit as per the Larger Bench s judgment in Vikram Ispat v. Commissioner - 2000 (120) E.L.T. 800 (Tri. -L.B.), where the break up of duty was available invoices and CENVAT credit was restricted in case of 100% EOU s as per sub-rule 6(a) of Rule-3 of CENVAT Credit Rules, 2001? 2. The facts of the case stated briefly are that the respondent had availed the CENVAT credit of the duty paid on the inputs under the CENVAT Credit Rules, 2001 (the Rules). The Central Excise Audit Party, during the course of scrutiny of the records of the respondent, noticed that during the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er had paid Rs. 8,52,799/-, whereas the respondent had taken credit of Rs. 2,93,023/- which was equal to the additional customs duty. Since the supplier had paid only 50% of the additional duty (i.e. basic excise duty), the respondent assessee was entitled to avail of CENVAT credit to the extent of the actual additional duty paid by the supplier of the inputs. 5. As can be seen from the order of Commissioner (Appeals), Commissioner (Appeals) has noted that the respondent had received goods from a 100% EOU. Goods manufactured by a 100% EOU are governed by Section 3(1) of the Central Excise Act, which provides that the duty of excise shall be an amount equal to the aggregate of the duties of customs on like goods produced or manufactured outside India if imported into India. Thus, at the time of clearance of goods by a 100% EOU, what is paid is duty of excise and not customs duty though quantum of collection is equal to the duty of customs. It is observed that the measure of collection of duty does not change the nature of duty. Hence, what has been paid by the supplier is duty of excise and not duties of custom (basic customs duty, additional duty etc.) and as such, the adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal in Vikram Ispat case, wherein it has been held thus : 16. Notification No. 2/95-C.E., dated 4-1-95 provides that the goods manufactured and cleared by a 100% E.O.U. to DTA will be exempted from so much of duty of excise as is in excess of the amount calculated at the rate of 50% of each of duty of customs leviable read with any other notification for the time being in force on the like goods produced or manufactured outside India, if imported into India, provided that the amount of duty payable shall not be less than the duty of excise leviable on the like goods produced or manufactured by the units in Domestic Tariff Area read with any relevant notification. It is, thus apparent that notification No. 2/95 provides a minimum limit of the rate of duty which has to be paid by a 100% E.O.U. while clearing the goods to DTA and this limit is provided by the duty of excise leviable on like goods, manufactured outside 100% E.O.U. However, if the aggregate of duty of customs leviable on goods cleared by 100% E.O.U. is more than the duty of excise leviable on like goods, a 100% E.O.U. has to pay more duty. The Revenue want to restrict the availment of Modvat credit to the compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Modvat credit has to be allowed to the manufacturer on the basis of the first proviso to Notification No. 5/94-C.E. As per the first proviso to this notification credit shall be restricted to the extent of duty which is equal to the additional duty leviable on like goods. If the additional duty is less than the actual duty paid on the inputs cleared from 100% EOU, the manufacturer in India shall be eligible only for the credit equivalent to the additional customs duty. On the other hand, if the duty actually paid by 100% EOU on inputs cleared by them is less than the additional duty of customs payable on like goods the manufacturer shall be eligible only to the extent of actual duty paid by 100% EOU. The reading of first proviso to Notification No. 5/94 does not indicate at all that the credit of specified duty shall be restricted to the components of additional customs duty actually paid by 100% E.O.U. as excise duty. Had this been the intention of the Government, the proviso would not have been termed in the present form. In that situation the proviso should have provided that the credit of specified duty shall be restricted to the extent of portion of excise duty which is equiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Area. 8. Rule 3 of the Cenvat Credit Rules, 2001 makes provision for CENVAT credit. Sub-rule (1) thereof provides that the manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as CENVAT credit) of the duties enumerated thereunder paid on any inputs or capital goods received in the factory on or after the first day of July, 2001 including the said duties paid on any inputs used in the manufacture of intermediate products, by a job worker availing the benefit of exemption as specified therein, and received by the manufacturer for use, in or in relation to, the manufacture of final products on or after the first day of July 2001. Sub-rule (6) of Rule 3 insofar as the same is relevant for the purpose of the present case reads thus : (6) Notwithstanding anything contained in sub-rule (1),- 1. CENVAT credit in respect of inputs or capital goods produced or manufactured, - (i). xxxxxx (ii) by a hundred per cent, export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or Software Technological Park and used in manufacture of the final products in any part of India, shall be restricted to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X
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