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2015 (9) TMI 1487 - AT - Central Excise100% EOU - debonding of unit - irregular credit by way of transfer of credit from EOU unit lying unutilized in the accounts of EOU unit at the time of de-bonding and exit from the EOU - whether the contention of Department that an EOU when it is converted from EOU to DTA unit, it (successor DTA unit) cannot get the credit of balance in Cenvat account of EOU on date of its conversion to DTA unit, by way of transfer, is justified? - imposition of penalty u/r 15 of Cenvat Credit Rules, 2004 - reliance placed on the decision of the case GTN Exports Ltd. v. CCE [2008 (7) TMI 377 - CESTAT, CHENNAI] - Held that: - In this case CESTAT allowed an EOU to take the credit of its predecessor domestic tariff area unit (DTA unit) citing that Rule 10 of Cenvat Credit Rules did not prohibit availment of such credit at the time of conversion of DTA to EOU. By applying the same rational we are unable to understand how the department would prohibit an EOU, when it is converting itself to a DTA scheme, to take the credit of the balance credit lying with the predecessor EOU. There is no logic and rational in` the department’s contention that Rule 10 of Cenvat Credit Rules, 2004 does not cover such a situation. The CESTAT Chennai’s decision in GTN Exports is very clear that Rule 10 of Cenvat Credit Rules did not prohibit availment of balance credit by an EOU at the time of its conversion to EOU from the DTA; by the same logic an EOU when it is converted to DTA unit would be entitled to take the balance credit lying in the Cenvat account of EOU at the time of its conversion to DTA unit. In other words a successor DTA unit can get the transfer credit of the unutilized credit lying with its predecessor unit, which is an EOU in the present case - the appeal is allowed with consequential benefits and when appeal succeeds in above terms penalty is also not sustainable.
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