TMI Blog2015 (10) TMI 2508X X X X Extracts X X X X X X X X Extracts X X X X ..... of procuring goods without payment of duty, the respondent has used already duty neutralized goods for manufacture of export goods. Had the CENVAT Credit been reversed by the erstwhile unit before the conversion, the newly minted Export Oriented Unit would be entitled to avail CENVAT Credit of like amount. These circumstances of revenue neutrality are a clear pointer to the rationale for redundancy of a specific provision for such an event in the CENVAT Credit Rules. - Demand is not sustainable - Decided against the revenue. - E/182/2007 - A/86943/16/EB - Dated:- 6-10-2015 - Shri M V Ravindran, Member (Judicial) Shri C J Mathew, Member (Technical) Shri Ajay Kumar, Jt. Commissioner (AR) for the appellant Shri Gajendra Jain, Advocate for the respondent Per: C J Mathew: This appeal has been filed by Revenue against order-in-appeal no. PI/258/06 dated 12th July 2006 of Commissioner of Central Excise (Appeals), Pune I setting aside the order of the lower authority by which duty of ₹ 33,30,162/- was confirmed, with interest thereon, besides imposing penalty of ₹ 8,32,500/-. 2. Proceedings were initiated against M/ Sandvik Asia Ltd on 30th Sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as an Export Oriented Unit. An infrequent occurrence, it is even more rare for such an occurrence to be accompanied by transfer of raw materials in this manner. That, probably, is one of the reasons for the absence of any reference to such a contingency in the CENVAT Credit Rules, 2002. It is more likely that it 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 Credit has been taken are used in production, revenue is not jeopardized. Instead of procuring goods without payment of duty, the respondent has used already duty neutralized goods for manufacture of export goods. Had the CENVAT Credit been reversed by the erstwhile unit before the conversion, the newly minted Export Oriented Unit would be entitled to avail CENVAT Credit of like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Sun Pharmaceuticals Industries Ltd. (supra), it would be appropriate to reproduce the relevant paragraphs of the said decision: 6. We have carefully considered the case records and the submissions by both sides. We find that Sun had not violated the provisions of Rule 3 (1) and 3(4) of CCR and Rule 11 of CER as proposed in the show cause notice, as it had availed cenvat credit of excise duty paid on inputs in accordance with law. Rule 3(4) requires that the manufacturer shall pay an amount equal to the credit availed when inputs or capital goods are removed as such from, the factory. Rule 11 of CER requires removal of goods under invoice. We find that the credit availed inputs were not removed in the instant case from the premises of Sun when Sun got converted into an EOU. Therefore, the contravention of provisions of Rule 3 (1) and 3(4) of CCR and Rule 11 of CER alleged in the show cause notice has not occurred. Therefore, the consequential demand of cenvat credit relating to the inputs at the time of conversion of Sun into an EOU and the liability to penalties proposed did not exist. Therefore, the orders of the lower authorities are not sustainable. 7. In CCR' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from availing cenvat credit or utilizing the same for payment of duty on excisable goods removed to the DTA or for payment of duty on goods exported under claim for rebate. Also there exists no bar for a DTA unit carrying over inputs and the cenvat credit balance in its accounts when it got converted into an EOU. We also observe that this Tribunal in Waterbase Ltd. Vs. CCE, Guntur reported in 2005 (187) ELT 346 (Tri.-Bang.) = (2005-TIOL-947-CESTAT-BANG) had made the following observations. 6. We have gone through the rival contentions. The appellants have informed their intention of taking Cenvat credit. The Department acknowledged the intimation sent by the appellants. In these circumstances, the appellants started taking credit. Therefore, there is no contumacious conduct on the part of the appellants warranting imposition of any penalty. Therefore the penalties imposed on the appellants and on Shri P. Ravi, General Manager are set aside. As regards the merits of the case, we find that there is no rule corresponding to the erstwhile Rule 100H of the Central Excise Rules, 1944. The interpretation that there is no prohibition for 100% E.O.U. to take Cenvat credit appears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (291) ELT 325 (Bom)] 2.?The Tribunal has held that the assessee is entitled to avail the credit in balance as on the date of conversion by relying upon the decisions by the Tribunal in Sun Pharmaceuticals Industries Ltd. v. Commissioner of Central Excise, Pondicherry - 2010 (251) 312 (Tri.-Chennai); GTN Exports Ltd. v. Commissioner of Central Excise, Coimbatore - 2009 (240) E.L.T. 53 (Tri.-Chennai) and Commissioner of Central Excise, Rajkot v. Ashok Iron Steel Fabricators - 2002 (140) E.L.T. 277 (Tri.-LB). It is not in dispute that the decision of the Tribunal in the case of Sun Pharmaceuticals Industries (supra) and GTN Exports Ltd. (supra) have been accepted by the Revenue. It is also not in dispute that appeal filed by the Revenue against the decision of the CESTAT in the case of Ashok Iron Steel Fabricators (supra) has been dismissed by the Apex Court. In this view of the matter, in our opinion, no fault can be found with the decision of the CESTAT. Hence, the appeal is dismissed with no order as to costs. 11. In the light of the above analysis and decisions, we are in agreement with impugned order and reject the appeal of Revenue. (Pronounced in Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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