Appeal Granted: Transfer Credit from DTA to 100% EOU under Cenvat Credit Rules

The Tribunal allowed the appeal, permitting the transfer of credit from DTA to 100% EOU under Rule 10 of the Cenvat Credit Rules, 2004, in line with judicial precedents. The duty demand, interest imposition, and penalty were deemed unsustainable, providing relief to the appellant, M/s. Matrix Laboratories Ltd.

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Issues:
Appeal against Order-in-Original denying transfer of credit upon conversion to 100% EOU, duty demand confirmation, interest imposition, penalty imposition.

Analysis:
1. The appeal challenged Order-in-Original No. 01/Cus/2009 denying transfer of credit upon conversion from DTA to 100% EOU. The adjudicating authority confirmed a duty demand of Rs. 1,04,27,324 and interest on the amount, along with imposing a penalty of Rs. 5.00 lakhs. The appellant, M/s. Matrix Laboratories Ltd., contested these decisions.

2. The appellant relied on the decision of the Hon'ble Bombay High Court in the case of CCE Vs. Sandoz Pvt. Ltd. where it was held that Cenvat Credit available at the time of conversion can be utilized only for clearances by the EOU. The Tribunal also supported this view in the case of Watson Pharma Pvt. Ltd. Vs. CCE, Thane-I. The appellant argued that based on these precedents, the demand was not sustainable.

3. The Additional Commissioner representing the Revenue reiterated the findings of the adjudicating authority, opposing the appellant's contentions.

4. The Tribunal, comprising P R Chandrasekharan and Anil Choudhary, observed that Rule 10 of the Cenvat Credit Rules, 2004 does not prohibit the transfer of credit upon conversion to 100% EOU. As there was no specific prohibition, the appellants were deemed entitled to transfer the credit. The Tribunal upheld the decisions of the Hon'ble Bombay High Court and the Tribunal in previous cases, affirming the right to transfer credit upon conversion. Consequently, the impugned demands were deemed unsustainable, and the appeal was allowed with any consequential relief.

Conclusion:
The Tribunal's decision allowed the appeal, permitting the transfer of credit from DTA to 100% EOU as per Rule 10 of the Cenvat Credit Rules, 2004, in line with previous judicial precedents. The duty demand, interest imposition, and penalty were deemed unsustainable, providing relief to the appellant.

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