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2022 (4) TMI 69 - AT - Central Excise100% EOU - Interpretation of statute - CENVAT Credit - entitlement to first time credit of education cess and secondary higher education cess or not - period April 2007 to January 2009 - whether the formula, prescribed for availment of CENVAT credit, by the domestic manufacturers in cases of procurement from EOUs, should be inclusive of education cess and secondary higher education cess, in terms of Rule 3(7) of CENVAT Credit Rules? - HELD THAT:- The Rule says that credit shall be limited to Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value - Show-cause notice relies upon the words and expressions ‘BCD and CVD’ used in the Rule and contends that the formula does not give any scope for education cess and secondary higher education cess. The learned Commissioner relies on Rule 3(1) of CENVAT Credit Rules and finds that it is crystal clear that whatever duty specified is available as credit under CENVAT Credit Rules, 2004 and the total such credit availed is referred to in these rules as CENVAT Credit. Wherever the term CENVAT credit appears in these rules, they refer to the credit of duty as specified in rule 3 and entirely include in the terms CENVAT credit. It is not merely talking about Basic Excise Duty and for that other duties individually. Thus, learned Commissioner concludes that CENVAT Credit as appears in the Rules is not limited to basic excise duty and for other duties also. Learned Commissioner appears to mean thereby, that the Rules do not contemplate any credit of cesses payable and paid. This Tribunal had gone into the very same issue in the case of ENCORE HEALTHCARE PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [2017 (5) TMI 1379 - CESTAT MUMBAI] and have held that credit admissibility in such circumstances should be as per Rule 3(7) of CENVAT Credit Rules. Therefore, the impugned order does not require any interference inasmuch as the admissibility of credit of duty is concerned. Interest - HELD THAT:- The appellants have wrongfully availed excess credit which they have reversed subsequently on being pointed out. However, as submitted by the learned Authorised Representative, interest requires to be paid in view of the Apex Court’s decision in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [2011 (2) TMI 6 - SUPREME COURT]. Penalty - HELD THAT:- The contention of the appellant that penalty may not be imposed as the issue involved is about the interpretation of the provisions of a statute and no mala fides can be imputed per se. Moreover, the appellants have immediately reversed the credit on being pointed out by the investigation team and there is no mention of protest whatsoever. For this reason, the department has not made out any case for imposition of penalty - Penalty set aside. The denial of excess credit availed by the appellant is upheld along with interest - penalty is set aside - Appeal allowed in part.
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