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M/s John Deere India Pvt Ltd Versus Commissioner of Central Excise, Pune-III

2015 (10) TMI 844 - CESTAT MUMBAI

Denial of CENVAT Credit - Conversion of EOU to DTA Unit - Carry forward of unutilized CENVAT Credit - The entire case of the Revenue is that the amounts which have been carried forward after reversal of appropriate duty on the inputs lying in stock, finished goods and WIP, the balance credit lapses as per the provisions of sub-rule 3 of Rule 11 of Cenvat Credit Rules while it is the case of the appellant that they are eligible to utilize the amount for discharge of duty liability on other produc .....

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he same will apply only in a situation where final products are exempted and lying in stock. In our considered view the above sub-rule may not be applicable in the facts of this case which is not disputed that there is a discharge of Central Excise duty liability on the other finished products manufactured and cleared like aggregates, components & parts of tractors. - Decision in the case of Shree Baba [2014 (11) TMI 749 - CESTAT NEW DELHI] followed - Impugned order is set aside - Decided in fav .....

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agricultural tractors and parts & components thereof. The appellant converted their EOU into DTA unit on 08.08.2011. On conversion of DTA unit, the appellant had discharged the applicable duties on the inputs in stock, inputs contained in finished goods and Work in Progress (WIP) as envisaged in the provisions due to the reason that being a EOU they have received inputs without payment of duty. After reversing / paying the duty on conversion to DTA there was a carry-over of unutilized credi .....

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The adjudicating authority after following due process of law, did not agree with the contention raised by the appellant holding that the provisions of Rule 11 of Cenvat Credit Rules, 2004 will be attracted and the credit lying in balance when the appellant switched over from EOU to DTA need to lapse as the appellant's final product agricultural tractors were fully exempted with effect from 01.03.2006. 3. Learned Consultant appearing on behalf of the appellant would take us through the entir .....

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ot utilize the same as being an EOU. It is his submission that the Central Excise duty payable on inputs lying in stock, on finished goods and on WIP was calculated and paid as soon as debonding order was received and such payment of duty is not in dispute. It is his submission that provisions of Rule 11 of the Cenvat Credit Rules will be applicable only when the appellant is manufacturing exempted goods and not when various goods are manufactured and duty liability is discharged. He would draw .....

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s of tractors. He would rely upon the decision of the Tribunal in the case of Shree Baba Exports - 2015 (318) ELT 328 (Tri.Del). 4. Learned D.R. would read the findings recorded by the adjudicating authority in the impugned order and more specifically paragraphs 18 to 20. It is his submission that the main manufacturing activity of the appellant is agricultural tractors, aggregates and components & parts thereof may not be main manufacturing activity. It is his submission that when inputs ar .....

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position that on debonding any Cenvat credit that is carried over has to lapse and cannot be used. He would also rely upon the judgement of the Tribunal in the case of Bajaj Foods Ltd. - 2012 (280) ELT 281 (Tri. - Ahmd.) for the same proposition. 5. We have considered the submissions made at length by both sides and perused the records. 6. It is undisputed that the appellant herein had converted his unit from EOU to DTA, reversed the amount of appropriate duty on inputs, inputs in finished goods .....

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been carried forward after reversal of appropriate duty on the inputs lying in stock, finished goods and WIP, the balance credit lapses as per the provisions of sub-rule 3 of Rule 11 of Cenvat Credit Rules while it is the case of the appellant that they are eligible to utilize the amount for discharge of duty liability on other products manufactured by them. 6.2 We find from the impugned order that the adjudicating authority has not disputed the fact that the appellant utilized the carried forwa .....

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a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if,- (i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act ; or (ii) the said final product ha .....

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ill apply only in a situation where final products are exempted and lying in stock. In our considered view the above sub-rule may not be applicable in the facts of this case which is not disputed that there is a discharge of Central Excise duty liability on the other finished products manufactured and cleared like aggregates, components & parts of tractors. The above said view, is fortified by the judgement of the Tribunal in the case of Shree Baba (supra) wherein after extracting sub-rule 3 .....

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ying in stock on the date of exemption, and after deducting this amount from the Cenvat credit balance, if any, as on the date of exemption, if any Cenvat credit balance still remains, it shall lapse and the same shall not be allowed to be utilized for payment of duty on any goods whether cleared for home consumption or for export. In our view, this sub-rule would not apply when out of common Cenvat credit availed inputs, more than one final products are manufactured and while some final product .....

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