TMI Blog2012 (7) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/99-FTT) is also applicable to instant case where 100% EOUs were converted into DTA Units. The CBEC Circular categorically states that cenvat credit lying in balance on the date of conversion would lapse and cannot be utilized after such conversion. Moreover, the Rule 10 of Cenvat Credit Rules, 2004 stipulates the situations where a manufacturer can transfer the unutilized cenvat credit to another unit. The said Rule does not permit transfer of unutilized cenvat credit lying in balance in case of conversion of an 100% EOU to DTA Unit. There is no statutory provision to allow transfer of such credit from 100% EOU to DTA Unit. As such it is rightly held by original authority that such credit has lapsed and cannot be utilized for payment of duty on goods exported by DTA Unit. - Decided in favour of Revenue. - F.No. 195/855-856/2010-RA - 866-869/2012-CX - Dated:- 24-7-2012 - Shri D.P. Singh, Joint Secretary None, for the Department. Shri T. Chandran Nair, Advocate and Ms. Manasi, Consultant, for the Assessee. ORDER The revision application Nos. 198/498-499/10-RA have been filed by applicant Commissioner Central Excise, Thane-I whereas the revision application Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit to a DTA Unit on its conversion and as such as a normal unit it is not eligible to utilize this credit for payment of duty on clearances of their goods, as the credit lying balance gets lapsed after debonding and there is no provision to carry forward the credit accumulated during the course of its existence as an EOU Unit and utilize the same after its exit from the said scheme. 2.3.2 The respondent have contravened the provisions of Rules 10, 11 and 12 read with Rule 2(a)(k)(l) of the Cenvat Credit Rules, 2004 by using the credit balance accumulated as EOU for payment of duty, when final debonding of the EOU took place on 29-9-2008. Rule 4 of the Cenvat Credit Rules, 2004 clearly stipulates that the cenvat credit in respect of the inputs may be taken immediately on receipts of the inputs in the factory of manufacturer, which can be subsequently used for payment of duty on final product clearances. In the instant case, accumulated credit has been used for clearance of export under rebate Rule 18 of the Central Excise Rules, 2002 subsequent to lapsing of the EOU status of said unit. Rule 10 governs the situation where the manufacture can transfer the cenvat credit from one u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARE-1 Nos. 95 to 97 of 2008-2009 along with requisite documents on 26-3-2009 for ₹ 3,04,402/-. It is seen that for paying duty on the clearances under the above said ARE-1s, the assessee have debited the input credit accumulated during the period when they were 100% EOU. There is no provision under the Excise Law or Rules which provides that such credit will be valid, even after the debonding of EOU. On debonding the input credit accumulated if any of the EOU shall lapse Hence the duty at the time of removal of goods for DTA clearances or for export cannot be debited. Hence rebate of duty on exports made out of such debits and accumulated cenvat credit of EOU period shall not be admissible. After due process of adjudication these rebate claims were rejected by the original adjudicating authority vide above Order-in-Original No. R 257/09-10, dated 30-6-2009. 4. Being aggrieved by the said order-in-original, the applicant exporter filed appeals before Commissioner (Appeals) who upheld the impugned order-in-original and rejected the appeal on the ground that applicant had used cenvat credit of EOU Unit prior to debonding of EOU in question for applicant was not eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following judgments : Raphael Pharmaceuticals - 1988 (38) E.L.T. 11 (A.P.). Transpek Industries - 2001 (138) E.L.T. 189 (T). -do- upheld by Supreme Court - 2002 (140) E.L.T. A-97 (S.C.). 5.6 The question of transfer of credit would come into picture only when the factory or machines are shifted from one place to another. In the instant case, factory, products being manufactured, manufacturing process, ownership etc. remaining the same, an EOU was converted into DTA Unit and hence, unutilized credit balance to applicants available on the date of de-bonding is very much admissible for utilization after de-bonding. In any case, it is reiterated that, the new ground based on which denial of rebate has been upheld also is not sustainable. 5.7 That if they would have paid duty on the date of de-bonding, credit of the same would have been admissible to themselves known as DTA unit after de-bonding. Under the said circumstances, the unutilized credit prior to de-bonding was very much available even after de-bonding. 5.8 That the provisions of Rule 18 and Rule 19 as well as Notifications issued thereunder like 19/2004-C.E. (N.T.), dated 6-9-2004, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29-5-2012. Shri T. Chandran Nair, Advocate and Ms. Manasi, Consultant appeared on behalf of the respondent and stated that order-in-appeal may be upheld. Nobody appeared on behalf of the applicant department. 7. Government has carefully gone through the relevant case records and perused the impugned orders-in-original and orders-in-appeal. 8. Government notes that the factual details of impugned rebate claims of exports by the said DTA Unit which got converted to DTA Unit from a 100% EOU Unit, are not in dispute so far as the details of amounts, dates and mode of payments of duties are concerned. The basic dispute herein is that as to whether the rebate of duties actually paid out of the unutilized cenvat credit lying in balance with 100% EOU at the time of conversion to DTA Unit, on the goods exported by applicant, can be granted under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/04-C.E. (N.T.), dated 6-9-2004. 9. The adjudicating authority has held that the accumulated cenvat credit available at the time of converting the 100% EOU Unit to DTA Unit is not available as it had lapsed. The duty paid from such lapsed credit cannot be treated as duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, machinery and equipment already installed. In this connection, instances have come to the notice of the Board that such units on their conversion into EOUs have been asked to reverse the Modvat Credit already availed of, on plant and machinery procured by them prior to their conversion into EOUs. 2. The matter has been examined. It is clarified that if the DTA unit has availed of the Modvat credit on plant, machinery and equipment and also utilized such credit for payment of duty on goods manufactured and cleared before its conversion into EOU/EHTP/STP, the same is not required to be demanded on its conversion into EOU/EHTP/STP. However, if the Modvat credit so availed of is lying in balance as unutilized on the date of conversion into EOU/EHTP/STP, it would lapse on conversion of DTA unit into EOU/EHTP/STP Unit and cannot be utilized after such conversion. 10.2 The said clarification is also applicable to instant case where 100% EOUs were converted into DTA Units. The CBEC Circular categorically states that cenvat credit lying in balance on the date of conversion would lapse and cannot be utilized after such conversion. Moreover, the Rule 10 of Cenvat Credit Rules, 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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