TMI Blog2014 (10) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In so far as the capital goods are concerned, it was used by the assessee in DTA unit. Thereafter, with the permission of the authorities in terms of the Rules 11 and 20 of the Central Excise Rules 2002 and Clause (6) of the Notification No.22/2003, the assessee removed the said goods from DTA unit to EHTP unit. Capital goods purchased for DTA unit was used, it was not removed as such and when it was removed to EHTP unit again, they have no liability to pay the credit. This aspect has been completely missed by the authority. They proceeded on the assumption that user industry thereby mean EHTP unit was not bringing excisable goods directly from the factory of manufacture or warehouse and therefore they are not eligible for exemption. In the light of the aforesaid Notification which granted exemption, it is very clear that EHTP unit is entitled to exemption of payment of duty. Therefore, the assessee rightly availed the Cenvat credit and then reversed it when those goods were moved to EHTP unit and claimed refund. - Decided in favor of assessee. Whether the assessee was not liable to pay any duty when capital goods after it is being used was removed to the EOU unit - Held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate had been issued. Condition No.(1) of para (1) of Notification No.22/2003 specifically states that the user industry should bring the excisable goods directly from the factory of manufacture or warehouse. As such, the impugned inputs and capital goods cleared as such are not eligible for the benefits of this Notification, since they are neither manufactured nor deemed to be manufactured in the factory from where they were removed. In reply, the assessee amongst other things stated that during early 2003 i.e., between March 2003 to May 2003, they shifted some of the duty paid raw material and used capital goods on which credit was taken from DTA unit to EHTP unit, after duly obtaining permission from the department. Further, as per the audit contention the assessee has discharged duty amount of ₹ 22,21,477/- through Cenvat debit under protest as per their letter dated 22.11.2004. Therefore, the assessee filed an application for refund of ₹ 22,21,477/- paid under protest. The Deputy Commissioner of Central Excise, C Division adjudicated the dispute and rejected the refund application filed by the assessee by his order dated 31.03.2005. Aggrieved by the said order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee purchased the capital goods as well as raw material, it has paid excise duty. With the permission of the authority, it has transmitted or shifted the capital goods after its use and raw material as such to the EHTP unit. When it purchased the goods it had availed Cenvat credit. During the audit, the authorities compelled the assessee to reverse the Cenvat credit which was illegal. It reversed the Cenvat credit under protest and thereafter filed an application for refund. When the authorities have permitted the transmission of raw material and used capital goods which have suffered duty to EHTP unit, it was not liable to reverse credit. The assessee was not required to reverse the Cenvat credit which he had availed. By force, that entry was reversed. The assessee is entitled to refund which has been upheld by the Tribunal. Therefore, he submits no case for interference is made out. 4. In so far as the judgment of the Tribunal in Lakshmi Automatic Loom Works Ltd., vs. Commissioner of Central Excise, Tricy (2008 (232) E.L.T. 428 (Tri-LB) , which the Supreme Court wants this Court to take note of while deciding this case, is concerned, it has no application to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the hundred percent export oriented Scheme (hereinafter referred to as the user industry); or Subject to following conditions, namely:- (1) the user industry brings the excisable goods directly from the factory of manufacture or warehouse; xxxxxx (5) the manufacturer of said goods follows the procedure contained in rules 11 and 20 of the Central Excise Rules, 2002; 7. The larger bench of the CESTAT in Lakshmi Automatic Loom Works Ltd., vs. Commissioner of Central Excise, Trichy was dealing with Notification No.1/95-C.E. which is now substituted by Notification No.22/2003. At paras 6.4, 6.5, 6.7 and 6.8, it has been held as under: 6.4. It can be seen that Rule 57F contains provisions relating to utilisation of the inputs and utilisation of credit taken. As far as the inputs are concerned, the general rule is that they should be utilised for the manufacture of final products. However, it contains certain exceptions. The inputs can be both imported as well as locally procured. The inputs can, after intimating the jurisdictional excise authorities, be exported under bond; it can also be cleared for home consumption but only on paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit or payment of equivalent amount of duty. 8. From the aforesaid, it is clear, the EOU is entitled to procure goods duty free. Such procurement is permissible only subject to fulfillment of condition of the exemption notification. Further, the decision of Larger Bench of the Tribunal in Lakshmi Automatic Loom Works Ltd., (supra) deals with only reversal of input as such and not removal of used capital goods. In the instant case, the assessee is having Domestic Tariff Area (DTA) Unit in the ground floor. It is having Electronic Hardware Technology Parks (EHTP) Unit in the first floor. The assessee while purchasing the capital goods as well as inputs to its DTA unit has paid duty. Therefore, it has availed Cenvat credit. In so far as the capital goods are concerned, it was used by the assessee in DTA unit. Thereafter, with the permission of the authorities in terms of the Rules 11 and 20 of the Central Excise Rules 2002 and Clause (6) of the Notification No.22/2003, the assessee removed the said goods from DTA unit to EHTP unit. As the said removal of used capital goods was done before the amendment to Rule 3(4)(5) of the Cenvat Credit Rules 2004 during November 2007, no cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved to the EOU unit. 10. Rule 3 Sub-rule 4 of Cenvat Credit Rules, 2002 reads as under: (4) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, the manufacturer of the final products 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 7. 11. The liability to pay duty on capital goods arises after the capital goods have been removed as such. The word as such is being the subject matter of interpretation by the various Courts. Punjab and Haryana High Court in the case of Commissioner of Central Excise, Ludhiana vs. Khalsa Cotspin (P) Ltd., reported in 2011 (270) E.L.T. 349 (P H) has held as under: The assessee having validly availed cenvat credit, same is required to be reversed only if goods were cleared in the same position without payment of excise duty. In the present case, it has been held by the Tribunal that goods were not cleared in the same position but after having been used and in such situation Rule 3(5) of the Rules will not apply. 12. Bombay High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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