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2016 (6) TMI 827 - CESTAT MUMBAI

2016 (6) TMI 827 - CESTAT MUMBAI - 2016 (338) E.L.T. 631 (Tri. - Mumbai) - Conversion of DTA unit into 100% EOU - reversal fo Cenvat Credit attributable to the capital goods and inputs transferred to their 100% EOU within the factory premises or otherwise. - Held that:- inputs and capital goods were within the factory premises of the appellant even after carving out of the EOU by them. Provisions of rule 3(4) of the Cenvat Credit Rules are attracted only when the MODVAT/CENVAT Credit availed inp .....

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status of the EOU is bit different than the DTA, it cannot be said that both are separate units. In our view this observation of the adjudicating authority cannot withstand scrutiny of the law - appellant has made out a case in his favour - Demand set aside - Decided in favor of assessee. - Appeal No. E/1407/05 - Final Order No. A/87831/2016-WZB/EB - Dated:- 10-5-2016 - SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) Shri Gajendra Jain, Advocate with Shri Rajesh Ostwal, .....

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1985. In the month of April, 2002, the appellant had carved out a portion in the factory premises and converted the same into Behr India Pvt. Ltd. 100% EOU and registered the premises with the authorities as 100% EOU and deleted the said portion from the ground plane of Behr India Ltd. The assessee when cr carved out a 100% EOU, they also transferred MODVAT/CENVAT Credit availed capital goods and inputs. It is the case of the Revenue in the show-cause notice that the appellant should have rever .....

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by the judgment of the Tribunal in the case of Jamna Auto Industries Ltd. - 2001 (130) ELT 181. The adjudicating authority after following the due process of law, came to a conclusion that there is no force in the statements made by the appellant. Coming to such a conclusion, he confirmed the demand raised with interest and also imposed penalties. 3. Learned Counsel, after taking us through the entire case records, submits that the 100% EOU is also having the same name as the appellant; there i .....

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291) ELT 325 (Bom). He would submit that for the period in dispute in this case, the provisions of Cenvat Credit Rules did not have anything to indicate that the credit should not be availed by an EOU nor there was any rule that credit should be availed. He would submit that in the case of Sandoz Pvt. Ltd. and in the case of Sandvik Asia Ltd., this issue was gone into by Bench and held in favour of the assessee. It is his submission that reading of provisions of Rule 17 of Central Excise Rules, .....

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cable during the relevant period and submit that the said rule compels for discharge of CENVAT Credit if they are removed from the factory. It is his submission that DTA unit and the EOU are separate and the transferring to inputs and capital goods to 100% EOU is nothing but removal of the duty paid capital goods and the inputs. It is his submission that the appellant is required to discharge the duty liability on such removal. He relies upon the statement of the Hon'ble High Court of Karnat .....

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been expressed by the Tribunal in the case of J.K. Paper Mills - 2014 (309) ELT 359 (Tri-Kol). 5. We have considered the submissions made at length by both sides and perused the records. 5.1 The issue involved in this case is regarding whether the appellant is required to reverse the MODVAT/CENVAT Credit availed on capital goods and inputs which were procured by them when transferred to 100% EOU within the factory premises or otherwise. Undisputed facts are that the appellant is eligible to avai .....

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ing out of the EOU by them. Provisions of rule 3(4) of the Cenvat Credit Rules are attracted only when the MODVAT/CENVAT Credit availed inputs or capital goods are removed from the factory premises is undisputed. The only question remain is whether the transferring of capital goods to their own 100% EOU requires such discharge of duty liability. In our view both the lower authorities have misdirected the finding and came to conclusion that the appellant is required to reverse the CENVAT Credit. .....

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nnot be said that both are separate units. In our view this observation of the adjudicating authority cannot withstand scrutiny of the law as has been held by the Bench in the case of Sandvik Asia Ltd. (supra). We reproduce the relevant paragraphs: - 2. Proceedings were initiated against M/s Sandvik Asia Ltd on 30th September 2005 in connection with CENVAT Credit availed by them prior to 1st September 2004 on raw materials received at their factory in Dapedi for manufacture of tools'. A par .....

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rial procured by it, usage of a part of it by the 100% Export Oriented Unit after 1st September 2004 was tantamount to removal and non-utilisation for manufacture of excisable goods; such removal should have been preceded by reversal of the credit taken on such goods. Hence, the assessee was held liable to duty equivalent to the CENVAT Credit that had been wrongly availed in contravention of Rule 2(g) of CENVAT Credit rules, 2002. It is that finding of the original authority that was set aside i .....

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was not perceived as having an impact at all on revenue. The transformation does not alter the works undertaken in the unit. Nor is the statutory jurisdiction altered. Eligibility for CENVAT Credit remains unchanged except that, as an Export Oriented Unit, duty-free procurement is an alternative. 7. Excise duty is fastened on goods and not on the status of the manufacturer; payment of duty and availment of credit of duty so paid is in relation to goods. As long as the goods on which CENVAT Cred .....

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rovision for such an event in the CENVAT Credit Rules. 8. We also find that not only is there no revenue impact but that there is no transfer at all. The role of M/s Sandvik Asia Ltd in the manufacturing premises remains unchanged. There is no transfer to speak of, much less removal of raw materials. Hence, the provision of CENVAT Credit Rules cited by the original authority to confirm the demand is clearly inapplicable. While coming to such a conclusion as reproduced hereinabove (one of us Shri .....

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