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2018 (10) TMI 1368 - AT - Central Excise100% EOU / STP - CENVAT Credit - inputs removed as such - Rule 3 (5) of Cenvat Credit Rules (CCR) 2004 - Department took the view that an user industry in STP / 100% EOU could bring excisable goods without payment of duty under CT-3 certificates only from the factory of manufacturer of the goods and such manufacturer should have followed procedures contained in Central Excise Rules 2002 - N/N. 22/2003-CE dt. 31.03.2003. Held that:- Larger Bench in Lakshmi Automatic Loom Works Ltd. [2008 (10) TMI 57 - CESTAT CHENNAI] had held that condition of direct procurement from factory of DTA manufacturer to EOU / EHTP units etc. is not merely procedural, that inputs cleared as such by such DTA assessee to 100% EOU cannot be deemed to have been manufactured by them, hence such assessee was not entitled to remove the inputs without reversal of credit or payment of equivalent amount of duty - the said decision is overturned by Hon’ble High Court of Karnataka in CCE Bangalore Vs Solectron Centum Electronics Ltd. [2014 (10) TMI 596 - KARNATAKA HIGH COURT], where it was held that credit could not be denied on the ground that the EHTP unit concern was not procuring the excisable goods directly from the factory of manufacturer or warehouse. The provisions and conditionalities of Rule 3 (5) ibid will apply to both ‘inputs’ and ‘capital goods’, unless otherwise qualified in the said sub-rule. The Ld. Advocate is correct in his assertion that the ratio laid down by the Tribunal Larger Bench in the case of Lakshmi Automatic Loom Works Ltd. Vs CCE Trichy has surely been overturned and set aside by the Hon’ble High Court of Karnataka in judgment - appeal allowed - decided in favor of appellant.
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