At, Customs Excise Service Tax Appellate Tribunal New Delhi
By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA
By, PRESIDENT AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
For Petitioner: Rinki Arora, Advocate And For Respondents: H.C. Saini, DR
1. The Appeal is against order dated 24.02.2014 of Commissioner (Appeals) Bhopal. The appellants are engaged in the manufacture of cement and clinker liable to Central Excise duty. They were also availing Cenvat Credit of duty paid on inputs and capital goods in terms of Cenvat Credit Rules, 2004. They have availed Cenvat Credit of Rs. 2,58,144/- on capital goods received from 100% EOU. The credits were availed during the month of September, 2010 and April, 2011. The dispute in the present appeal relates to the quantum of Cenvat Credit available to the appellants when they procured the capital goods from 100% EOU. The lower authorities held that the appellants are not eligible to take credit of basic custom duty, as the same is not one of the listed duties in terms of Rule 3 of Central Credit Rules, 2004. Accordingly, proceedings were initiated against the appellant which resulted in the confirmation of denial of above-mentioned credit and imposition of equal amount of penalty on the appellants.
2. The Ld. Counsel for the appellant submitted that the appellants are eligible to take credit of duty paid by them on capital goods received from 100% EOU. The EOU paid the duty in terms of Section 3 of Central Excise Act, 1944 and the duty was collected as Central Excise duty only. Accordingly, the credit was availed by the appellant correctly. She also relied upon the decision of the Tribunal in Molex India (P) 2017-TIOL-158-CESTAT-BANG, as confirmed by the Hon'ble Supreme Court reported in 2017-TIOL-73-SC-CX.
3. The Ld. AIR supported the findings recorded by the lower authorities.
4. We have heard both the sides and perused the appeal records. The credit available in respect of Inputs and capital goods cleared on or after 7.9.2009 from EOU has been listed as one of the eligible credits under Cenvat Credit Rules, 2004. The second proviso under rule 3(7)(a) of the Cenvat Credit Rules, clearly provided for the quantification of eligible credit in such situations. For goods cleared from EOU, the credit shall be aggregate of that portion of excise duty as is equivalent to additional duty leviable under sub-section (1) of section 3 of Custom Tariff Act which is equal to the duty of excise under clause (a) of sub-section (1) of Section 3 of the Excise Act/additional duty leviable under sub-section (5) of Section 3 of Custom Tariff Act. We find that the second proviso under rule 3(7)(a) makes it clear that only additional duty (CVD) is eligible for Cenvat Credit, in a situation like the present one. There is no provision to take credit of basic customs duty, though the same would have been part of aggregate duty paid by EOU at the time of clearance of capital goods to the appellants. We also note that the decision of the Tribunal in Molex India Pvt. Ltd. (supra) is not dealing with the facts which are applicable in the present case. The second proviso is inserted under Rule 3(7)(a) of the Cenvat Credit Rules w.e.f. 7.9.2009 vide notification 22 of 2009 CE(NT). It makes the position clear regarding credit availability in the present case. The decision of the Tribunal in Molex (supra) is not discussing the implication of proviso inserted by this notification. Accordingly, we find no merit in the present appeal.
5. However, we find no reason for imposition of penalty on the appellant for availing such credit. The issue involved is one of interpretation of th
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e legal provisions of technical nature. The credits availed were reflected in the records as well as returns filed by the appellant. As such we set-aside the penalty imposed on the appellants. 6. In view of the above discussion and analysis, we dismiss the appeal on merit and the impugned order is modified only with reference to penalty imposed. The appeal is disposed-of