CENVAT credit on 100% EOU supplies extends to the duty leviable on like imports, not just the customs duty actually paid.

Credit on inputs procured from a 100% EOU through a domestic buyer is not confined to the additional duty of customs actually paid. The relevant notifications treat clearances by a 100% EOU to the Domestic Tariff Area as retaining the character of excise duty, while the credit limit is measured by the additional duty of customs leviable on like imported goods. The duty paid by the EOU cannot be split into customs-duty components to reduce credit to the exact duty actually paid. In the absence of contrary higher authority, the larger bench view governs under judicial discipline.

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Issues: Whether, in respect of inputs procured from a 100% Export Oriented Unit through a domestic buyer, the credit available to the manufacturer is confined to the additional duty of customs actually paid, or whether it extends to the amount equal to the additional duty of customs leviable on like imported goods.

Analysis: The relevant notifications and the larger bench ruling were applied to hold that clearances by a 100% EOU to the Domestic Tariff Area retain the character of excise duty, though the measure for computing credit is linked to the additional duty leviable under customs law. The ruling emphasised that the duty paid by the 100% EOU cannot be dissected into customs-duty components for restricting credit to the exact customs duty actually paid, and that the proviso governing credit limits it to the amount equal to the additional duty leviable on like goods. It was further noted that, in the absence of any contrary higher judicial authority, judicial discipline required following the larger bench view.

Conclusion: The credit was not confined to the additional duty of customs actually paid; it was admissible up to the amount equal to the additional duty of customs leviable. The assessee succeeded.

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