Custom, Excise & Service Tax Tribunal
Strides Arcolab Ltd vs Commissioner Of Central Excise ... on 26 November, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No .27008 / 2013 Appeal(s) Involved: E/447/2007-SM [Arising out of Order in Original No 07-2007 dated 14/03/2007 passed by CCE, Bangalore] STRIDES ARCOLAB LTD NO.36/7, SURAGAJAKKANAHALLI, INDIAWADI CROSS, ANEKA TALUK, BANGALORE DIST Appellant(s) Versus Commissioner of Central Excise ,Customs and Service Tax - BANGALORE-I POST BOX NO 5400...CR BUILDINGS, BANGALORE, KARNATAKA 560001 Respondent(s)
Appearance:
Shri Anirudh RJ Nayak, Advocate For the Appellant Shri Ganesh Haavanur, Addl. Commissioner(AR) For the Respondent CORAM: Honble Shri B.S.V. Murthy, Technical Member Date of Hearing: 26/11/2013 Date of Decision: 26/11/2013 Order Per : B.S.V. Murthy Appellant is a public company engaged in the manufacture of pharmaceutical products classifiable under chapter 30 of the Central Excise Tariff Act, 1985. During the month of August 2005, the appellant converted its DTA unit into a EOU. On the date of conversion of DTA into EOU, the appellant had a CENVAT credit balance of Rs.91,18,775/- which was retained by the EOU. The audit unit conducted audit of the appellant and pointed out by their audit note in 208/2005 dt. 06/01/200 that the availment of CENVAT credit of Rs.91,18,775/- as on the date of conversion was not tenable in law in the light of CBEC Circular No.77/99-Cus. dt.18/11/1999. The appellant replied to the above audit note by their reply dt. 01/12/2005 and pointed out that the CENVAT credit did not lapse in terms of the provisions of the CENVAT Credit Rules, 2004 (CCR) and that there was no such provision in law. Thereafter proceedings were initiated which has culminated in the impugned order wherein credit of Rs.38,59,661/- has been denied taking the view that the transfer of credit can be allowed only to the extent of input stock available with the DTA unit at the time of conversion into 100% EOU.
2. The learned counsel on behalf of the appellants submits that the issue is no longer res integra and is covered by the decision in the case of CCE Vs. Raveshia Colours Pvt. Ltd. [2013(292) ELT 96 (Tri.)] and the decision of the Honble High Court of Bombay in the case of CCE Vs. Sandoz Pvt. Ltd. [2013(291) ELT 325 (Bom.)]. On the other hand, the learned AR submits that the issue in this case is not covered by the decisions cited by the learned counsel. In this case, credit has been denied only to the extent of the input not being available and Commissioner has allowed the transfer of credit to the 100% EOU to the extent of inputs in stock. To the submission by the learned counsel that there were work in progress and finished goods in stock which were not taken into account at all by the Department, the learned AR would submit that these details were not furnished and therefore Revenue cannot be faulted with.
3. I have considered the submissions made by both the sides. The Commissioner herself has observed in para 18 that EOUs are entitled to avail CENVAT credit w.e.f. 06/09/2004 in view of the provisions in the Notification No.18/2004 CE(NT) dt. 06/09/2004. Therefore the issue involved is when the factory was converted from DTA to 100% EOU, credit could have been transferred or not. If the EOU is also entitled to avail CENVAT credit, obviously the entire amount available as credit in the books could have been transferred. This is in view of the fact that according to Rule 10 of CCR, even when there is change in ownership on account of sale, merger, amalgamation, lease or transfer of the factory with the specific provisions for transfer of liability, the CENVAT credit lying unutilized can be transferred. No doubt, the sub-rue 3 restricts it to the extent to the transfer of credit to the stock of inputs as such or in process. However Rule 11 which is transitional provision provides that any amount of credit earned by a manufacturer under the CCR, 2004, as they existed prior to 10/09/2004, and remaining unutilized shall be allowed as CENVAT credit to manufacturers or provider of output service under these rules and allowed the credit according to these rules. The .. of this case is whether an assessee ought to avail value based or quantity based exemption or the assessee is manufacturing goods which are absolutely exempted under a notification issued under Section 5A. In this case, the manufacturer remains the same. The factory remains the same. Only the status has changed from DTA to 100% EOU. The credit could have been utilized by the DTA unit if it is remained to be a DTA without any restriction for payment of duty. Just becase the unit got converted to 100% EOU which also became eligible for the CENVAT credit from 06/09/2004 i.e. prior to conversion of the DTA unit to 100% EOU, credit, in my opinion, cannot be limited to the stock of inputs lying with the assessee. What is to be examined is whether the credit has been taken correctly and was admissible when the same was taken. In my opinion, the decisions relied upon by the learned counsel are applicable to the facts of this case also. While the Commissioner has come to the conclusion that out of total credit lying unutilized at the time of conversion, the assessee would be entitled to the credit to the extent of inputs lying in stock at the time of conversion and transferred to EOU and excess credit would lapse, no legal basis or no statutory provision support this view has been mentioned in the order. Further no such statutory provision has been brought to my notice also today by the learned AR. Under these circumstances, in my opinion, the appellant has made out a case in their favour and accordingly, the appeal is allowed with consequential relief, if any, to the appellant.
(Order dictated and pronounced in open court) B.S.V. MURTHY TECHNICAL MEMBER Raja 4