Custom, Excise & Service Tax Tribunal
Carclo Technical Plastics Pvt Ltd vs Commissioner Of Central Excise, ... on 25 August, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/25710/2013-SM [Arising out of Order-in-Appeal No. 471/2012 dated 27/12/2012 passed by Commissioner of Central Excise , BANGALORE-II ] For approval and signature: HON'BLE SHRI S.S GARG, JUDICIAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Carclo Technical Plastics Pvt Ltd No.27a (2), Kiadb Industrial Area, DODDABALLAPUR DIST - KARNATAKA Appellant(s) Versus Commissioner of Central Excise, Service Tax And Customs BANGALORE-II PB 5400 CR BUIDING, QUEENS ROAD, BANGALORE 560 001. KARNATAKA Respondent(s)
Appearance:
Mr. Cherian PUnnoose, Advocate BSR & CO CHARTERED ACCOUNTANTS, INDIRECT TAX DEPT. 11-12/1, MARUTHI INFOTECH CENTRE, INNER RING ROAD, KORAMANGALA, BANGALORE 560071 For the Appellant Dr. K. Ezhilmathi, AR For the Respondent Date of Hearing: 25/08/2016 Date of Decision: 25/08/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20657 / 2016 Per : S.S GARG The present appeal is directed against the order passed by the Commissioner (A) dated 27.12.2012 vide which the appeal filed by the appellant was rejected and the Order-in-Original was upheld. Briefly the facts of the present case are that the appellant is a 100% Export Oriented Unit (EOU) engaged in the manufacture of parts and accessories for ATM machine classifiable under Chapter Heading 84 of Central Excise Tariff Act, 1984. Earlier the appellant had obtained Central Excise registration as a Domestic Tariff Area (DTA) unit and on 25.8.2010 appellant converted their DTA unit into a 100% EOU vide letter of permission dated 16.2.2010 issued by the Development Commissioner of CSEZ. During the period prior to conversion of the DTA unit as an EOU, appellant was undertaking the physical and deemed exports in addition to DTA clearances. Consequently, appellant had accumulated CENVAT credit balance to the tune of Rs.44,80,274/- and on conversion from DTA unit to EOU, appellant carried forward/transferred the unutilized CENVAT credit balance from DTA unit to EOU. Thereafter a show-cause notice was issued which culminated into passing of Order-in-Original confirming the demand and the appeal of the appellant was also rejected by the Commissioner (A) by the impugned order and hence the present appeal.
2. Heard both the parties and perused the records.
3. The issue involved in the present appeal is whether on conversion of DTA unit into a 100% EOU, the CENVAT credit lying as balance at the time of conversion can be availed and utilized by the 100% EOU or not. Learned counsel for the appellant submitted that the issue involved in the present case is no more res integra and is covered by the decisions of the Honble High Court as well as various decisions of the Honble Tribunal. The Honble Tribunal in the case of Sandoz Pvt. Ltd. vs. CCE, Belapur as reported in 2012 (278) E.L.T. 259 wherein the Tribunal has held that the 100% EOU is entitled for CENVAT credit available in the books of accounts at the time of conversion from DTA unit to 100% EOU. The said decision of the Honble Tribunal was upheld by the Honble High Court of Bombay in the case of CCE, Belapur vs. Sandoz Pvt. Ltd. as reported in 2013 (291) E.L.T. 325 (Bom.). Learned counsel further submitted that there is no provision under the CENVAT Credit Rules, which provides lapsing of CENVAT Credit on conversion of DTA unit to 100% EOU. He further submitted that as per new scheme even 100% EOU can procure the goods on payment of duty and avail the CENVAT credit. Thus the 100% EOU are not debarred from availing the CENVAT credit and under any circumstances they cannot be denied the unutilized CENVAT credit. In support of his submission, the learned counsel relied upon the following decisions:
* Sun Pharmaceuticals Indus. Ltd. vs. CCE, Pondicherry: 2010 (251) E.L.T. 312 (Tri.-Chennai) * Privi Organics Ltd. vs. CCE, Raigad: 2015 (324) E.L.T. 611 (Tri.-Mumbai) * Strides Arcolab Ltd. vs. CCE, Bangalore: 2014 (302) E.L.T. 577 (Tri.-Bang.) * CCE, Pune vs. Sandvik Asia Ltd.: [2016] 70 Taxmann.com 316 (Mumbai-CESTAT) * Heranba Industries Ltd. vs. CCE & ST, Damn: 2016 (5) TMI 1121-CESTAT-Ahmedabad * CCE, Vapi vs. Raveshia Colours Pvt. Ltd.: 2013 (292) E.L.T. 96 (Tri.-Ahmd.) * Behr India Ltd. vs. CCE, Pune: 2016 (6) TMI 827 CESTAT-Mumbai * Lupin Ltd. vs. CCE, Bhopal : 2016 (8) TMI-CESTAT New Delhi 3.1 In the case of Sun Pharmaceuticals Ltd. cited supra, the appellant therein was the manufacturers of Pharmaceuticals Products and Bulk Drugs and availed CENVAT credit on various inputs during their operation as DTA unit. On conversion to 100% EOU, the appellant availed the credit lying in balance amounting to Rs.27,94,664/-. A show cause notice cum demand notice was issued for recovery of the said credit. On adjudication, the demand was confirmed & penalty was also imposed. This Tribunal, interpreting the provisions as was in existence prior to the amendment brought to the relevant Central Excise Rule, 2002, recorded its reasons as follows:-
7. In CCR-02, or CCR-04, there exist no provisions barring an EOU from availing credit of excise duty paid on inputs it received. Rule 100H of CER-44 made various rules including Rule 57A to Rule 57U of CER-44 inapplicable to an EOU. CER-44 have been rescinded. There is also no corresponding rule/provision in CCR-01 or CCR-02. CER-01 and CER-02 contain transitional provisions to the effect that any circulars, instructions, orders, trading notices or other orders issued under the CER-44 superseded by CER-01, or such orders etc., issued under CER-01 superseded by CER-02, by the Board, and in force on the date the erstwhile rules were rescinded shall, to the extent they are relevant and consistent with the new set of rules shall be deemed to be valid. CBEC Circular No.77/99-Cus. dated 18.11.99 is reproduced below:-
Paragraph 9.28 of the EXIM Policy, 1997-2002 provides that existing DTA units may also apply for conversion into an EOU/EHTP/STP but no concession in duties and taxes would be available under the scheme for plant, machinery and equipment already installed. In this connection, instances have come to the notice of the Board that such units on their conversion into EOUs have been asked to reverse the Modvat Credit already availed of, on plant and machinery procured by them prior to their conversion into EOUs.
The matter has been examined. It is clarified that if the DTA unit has availed of the modvat credit on plant, machinery and equipment and also utilized such credit for payment of duty on goods manufactured and cleared before its conversion into EOU/EHTP/STP the same is not required to be demanded on its conversion into EOU/EHTP/STP. However, if the Modvat credit so availed of is lying in balance as unutilized on the date of conversion into EOU/EHTP/STP, it would lapse on conversion of DTA unit into EOU/EHTP/STP unit and cannot be utilized after such conversion. This circular was issued during the currency of CER, 1944 which contained Rule 100H which disentitled an EOU to the CENVAT scheme. The CER, 1944 have been rescinded. Therefore, Circular No.77/99 dated 18.11.99 has to be held to be no longer in force, in view of the transitional provisions contained in Rule 32 of CER, 2001.
3.2 Similarly, this Tribunal in the case of Water Base Ltd. vs. CCE, Guntur reported in 2005 (187) E.L.T. 346 (Tri.-Bang.) has 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 to be correct. However, in view of Rule 17 of the Central Excise Rules, the duty should be paid by a 100% EOU only through account current. Account current refers to PLA. In view of this position, the appellant cannot pay duty through Cenvat Credit. In that case, the appellant will not be in a position to utilize the CENVAT credit at all and it does not make any sense to allow him to take credit. The inconsistency between Cenvat Rules and Central Excise Rules can be removed only by the legislature. As such in view of the Rule 17 of the Central Excise Rules, the appellant cannot avail the credit taken by him for payment of duty in respect of clearance to DTA. Therefore the demand of duty only is confirmed. As already stated, the penalties are set aside. However, the demand of interest under Section 11AB is upheld.
4. On the other hand the learned AR reiterated the findings in the impugned order.
5. In view of the various judgments cited supra which squarely covers the case of the appellant and this Tribunal has consistently held that the appellant is entitled to transfer the unutilized CENVAT credit on conversion from DTA to 100% EOU. In view of the settled position of law, I am of the considered opinion that the impugned order is not sustainable in law and I set aside the same by allowing the appeal of the appellant with consequential relief, if any.
(Order pronounced and dictated in open court on 25.08.2016.) S.S GARG JUDICIAL MEMBER rv 7