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TMI Blog2019 (3) TMI 1698X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 26-10-2017, in appeals instituted under Section 35G of the Central Excise Act, 1944. 2. The Commissioner of Central Excise, Cochin through a common order passed on 30-1-2012 held that, the appellant had taken ineligible credit and utilized the amount to the tune of Rs. 36,38,579/- and Rs. 20,93,732/- on the inputs cleared as such; and that they are liable to reverse the credit availed along with interest and penalty of an equal amount. The appellant filed appeals before the Commissioner of Central Excise and Service Tax (Appeals), Cochin against the order mentioned above, in appeal No. COC-EXCUS - 000 - APP - 140 & 141 - 15-16. The Commissioner (Appeals) had confirmed the demand issued by the lower authority by holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding reversal of the credit availed, by relying on Rule 3(5) of the CENVAT Credit Rules, 2004. Despite the objections submitted by the appellant, the authority confirmed the proposal and demanded payment of the credit availed, along with interest, and penalty to the tune of an equivalent amount. Whether the demand is sustainable or not is the question to be decided? 5. Adv. G. Sivadas, Learned Senior Counsel appearing for the appellant contended that, provisions contained in Rule 3(5) of the CENVAT Credit Rules, which insists upon payment of an amount equal to the credit availed with respect to the inputs removed as such from the factory of the appellant, cannot be applied with respect to removal of inputs to a unit situated in the SE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) of the CENVAT Credit Rules for payment of an equal amount of credit availed, is mandatory in a case where the inputs are removed as such from the premises of the appellant. It is contended that the exemption provided under Rule 6(6) of the CENVAT Credit Rules will not apply with respect to the inputs removed as such, without manufacturing any products. It is also contended that, the exemption contained in Rule 6(6) will apply only with respect to finished products, for which the excise duty is payable, in the manufacture of which the inputs are used. It is further contended that the exemption provided under the Special Economic Zones Act, 2005 (SEZ Act, for short) with respect to payment of duty of excise would apply only with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore it is evident that any goods brought from the DTA to a unit in the SEZ for carrying on any authorized operations by usage of such goods, is exempted from payment of the excise duty Further, Section 51 of the SEZ Act provides that, provisions of the said Act shall have an overriding effect notwithstanding anything inconsistent contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than the said Act. Based on the above provisions, Senior Counsel for the appellant pointed out that, the CENVAT Credit Rules provides a situation wherein the credit of the duty availed on inputs could be utilized for payment of duty due on the manufactured goods. But, when the importer is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cover of ARE-1 Form. It is not in dispute that the inputs in this case were removed from the factory of the appellant to a unit in the SEZ under the cover of ARE-1 Form and therefore the appellant is entitled to the exemption permitting retention of the credit availed on the duty paid on inputs. In terms of Rule 6(6) of CENVAT Credit Rules it is contended that, the liability for reversal of the credit, envisaged under Rule 3(5) of the CENVAT Credit Rules, will not apply in this case because the inputs have been cleared to a unit in the SEZ through the bond executed. Therefore the demand for reversal cannot be sustained, is the contention. 9. In this regard, Circulars issued by the Central Board of Excise & Customs assumes importance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no dispute that the inputs were removed as such to a unit in the SEZ under cover of ARE-1, the above said provisions will apply and the appellant has to be exempted from reversal of credit availed on the duty paid on inputs. 11. Learned Standing Counsel appearing for the respondents contended that, the eligibility of a manufacturer for CENVAT Credit is governed by provisions of CENVAT Credit Rules, 2004 and unless the said Rules specifically exclude operation of Rule 3(5), the appellant cannot claim retention of the credit availed. Since the inputs were not used for manufacture, it is contended that, the appellant cannot be allowed to enjoy double benefit by retaining the CENVAT Credit taken on inputs, when the inputs as such was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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