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M/s. Solectron Centum Electronics Ltd., (for short hereinafter referred to as "assessee") is situated at No.44, KHB Industrial Area, Yelahanka New Town, Bangalore-64, which is registered under the Central Excise Registration No.AAACC7369PXM001. They are manufacturing PCB Assembly falling under Chapter 8534. The said unit is also having an EHTP unit registered vide Registration No.AAACC7369PXM002 manufacturing Hybrid Micro Circuit and Piezo Crystal Oscillator falling under Chapter 8542 and 8541. During the audit, it was observed that the assessee has removed certain inputs and used capital goods without payment of duty, on both of which Cenvat Credits were availed to their own EHTP unit. Therefore, it was pointed out by the Audit that they have to reverse the Cenvat Credit. However, the assessee contended that the clearances were made against CT-3 certificate issued in terms of Notification No.22/2003 dated 31.03.2003 by the customs authorities and that such clearances made to EOUs/EHTPs have the status of deemed exports and therefore, there is no need to reverse the credit involved. The Audit contended that the issuance of a CT-3 certificate does not automatically mean that the subject goods can be cleared without payment of duty or without reversing the credit involved, if it turns out that the CT-3 certificate has been issued beyond the scope or in contravention of the Notification No.22/2003 dated 31.03.2003 under which the said certificate had been issued. Condition No.(1) of para (1) of Notification No.22/2003 specifically states that the user industry should bring the excisable goods directly from the factory of manufacture or warehouse. As such, the impugned inputs and capital goods cleared as such are not eligible for the benefits of this Notification, since they are neither manufactured nor deemed to be manufactured in the factory from where they were removed. In reply, the assessee amongst other things stated that during early 2003 i.e., between March 2003 to May 2003, they shifted some of the duty paid raw material and used capital goods on which credit was taken from DTA unit to EHTP unit, after duly obtaining permission from the department. Further, as per the audit contention the assessee has discharged duty amount of Rs.22,21,477/- through Cenvat debit under protest as per their letter dated 22.11.2004. Therefore, the assessee filed an application for refund of Rs.22,21,477/- paid under protest. The Deputy Commissioner of Central Excise, "C" Division adjudicated the dispute and rejected the refund application filed by the assessee by his order dated 31.03.2005. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Central Excise (appeals). The appellate authority held that assessee knowingly cleared the item under CT-3 certificate without giving full information as brought out by the lower authority. The condition that the excisable goods should be brought directly from the factory of manufacture or warehouse is not fulfilled. Therefore, he found no merit in the appeal and rejected the same. Aggrieved by the said order the assessee preferred an appeal before the CESTAT. The Tribunal by the impugned order dated 04.08.2008 held that the capital goods had been removed only after considerable use and therefore there was no liability to pay any duty or credit on capital goods and therefore, set aside the order of the Original Authority as well as Appellate Authority and directed the refund of Rs.22,21,477/- claimed by the assessee. Aggrieved by the said order, the Revenue is in appeal. This Court after hearing both the parties by its judgment dated 08.03.2011 declined to interfere with the order passed by the Tribunal and dismissed the appeal. Aggrieved by the same, the Revenue preferred an appeal to the Apex Court in Civil Appeal No.2844/2014. The Apex Court has set aside the order passed by this Court and remanded the matter to the High Court to decide the case in the light of the judgment of the larger bench of the Tribunal in "Lakshmi Automatic Loom Works Ltd., vs. Commissioner of Central Excise, Tricy (2008 (232) E.L.T. 428 (Tri-LB)" on the ground that said judgment was neither brought to the notice of the High Court nor the High Court noticed it. That is how, the appeal is listed before us for fresh hearing.

3. Per contra, learned counsel appearing for the assessee submitted, the assessee is having the DTA unit in the ground floor and EHTP unit in the First floor. When the assessee purchased the capital goods as well as raw material, it has paid excise duty. With the permission of the authority, it has transmitted or shifted the capital goods after its use and raw material as such to the EHTP unit. When it purchased the goods it had availed Cenvat credit. During the audit, the authorities compelled the assessee to reverse the Cenvat credit which was illegal. It reversed the Cenvat credit under protest and thereafter filed an application for refund. When the authorities have permitted the transmission of raw material and used capital goods which have suffered duty to EHTP unit, it was not liable to reverse credit. The assessee was not required to reverse the Cenvat credit which he had availed. By force, that entry was reversed. The assessee is entitled to refund which has been upheld by the Tribunal. Therefore, he submits no case for interference is made out.

8. From the aforesaid, it is clear, the EOU is entitled to procure goods duty free. Such procurement is permissible only subject to fulfillment of condition of the exemption notification. Further, the decision of Larger Bench of the Tribunal in Lakshmi Automatic Loom Works Ltd., (supra) deals with only reversal of input as such and not removal of used capital goods. In the instant case, the assessee is having Domestic Tariff Area (DTA) Unit in the ground floor. It is having Electronic Hardware Technology Parks (EHTP) Unit in the first floor. The assessee while purchasing the capital goods as well as inputs to its DTA unit has paid duty. Therefore, it has availed Cenvat credit. In so far as the capital goods are concerned, it was used by the assessee in DTA unit. Thereafter, with the permission of the authorities in terms of the Rules 11 and 20 of the Central Excise Rules 2002 and Clause (6) of the Notification No.22/2003, the assessee removed the said goods from DTA unit to EHTP unit. As the said removal of used capital goods was done before the amendment to Rule3(4)(5) of the Cenvat Credit Rules 2004 during November 2007, no credit was reversible on removal of used capital goods and as such they were not liable to pay duty. In so far as the inputs are concerned, with the permission of the authorities as reflected in Form CT-3 they were also removed to EHTP unit. The assessee had purchased those inputs for its DTA unit. It was not liable to reverse credit as it had paid duty as it was purchased for DTA unit and thereafter with the permission of the authority removed to EOU unit. They were entitled to refund duty paid or reversal of the Cenvat credit. It is, during audit, the department took objections and made them to reverse those entries. They reversed the entries under protest and then they have preferred this application for refund. The argument is that the assessee is entitled to the said benefit only if the user industry brings excisable goods directly from the factory of manufacture or warehouse. In the instant case, when it removed goods to EHTP unit, it was not bringing excisable goods directly from the factory of manufacture or warehouse and therefore they are not entitled to the benefit of Notification No.22/2003. This is not a case where the assessee was purchasing those goods for its EHTP unit for the first time. It purchased the capital goods as well as inputs for its DTA unit. Therefore, duty was paid. Thereafter, with the permission of the authorities as reflected in CT- 3, the inputs were removed from DTA unit to the EHTP unit. Similarly, the capital goods purchased for DTA unit was used, it was not removed as such and when it was removed to EHTP unit again, they have no liability to pay the credit. This aspect has been completely missed by the authority. They proceeded on the assumption that user industry thereby mean EHTP unit was not bringing excisable goods directly from the factory of manufacture or warehouse and therefore they are not eligible for exemption. In the light of the aforesaid Notification which granted exemption, it is very clear that EHTP unit is entitled to exemption of payment of duty. Therefore, the assessee rightly availed the Cenvat credit and then reversed it when those goods were moved to EHTP unit and claimed refund. Therefore, the said question of law is answered in favour of the assessee and against the Revenue.