Tribunal allows appeal on Cenvat Credit reversal for EOU; emphasizes revenue neutrality, no duty reversal if cleared under CT-3.

The Tribunal set aside the lower authorities' decision demanding reversal of Cenvat Credit on inputs cleared against CT-3 certificate issued to an EOU. It was held that if inputs were removed with department permission under CT-3, duty reversal was justified, entitling refund. The Tribunal emphasized that the appellants had a strong case, as the situation was revenue neutral, and extended period for demand couldn't be invoked. The Commissioner's failure to discuss the limitation issue rendered the demand unsustainable, leading to the appeal's rejection. Consequently, the Tribunal allowed the appeal with consequential relief for the appellant.

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Issues:
Claiming Cenvat Credit on duty paid inputs cleared against CT-3 certificate issued to 100% EOU.

Analysis:
The appellants, engaged in manufacturing fiber reinforced products, claimed Cenvat Credit on inputs cleared against CT-3 certificate issued to an EOU. Dispute arose regarding the liability to reverse Cenvat Credit availed on such inputs. Lower authorities invoked Rule 3(4) of Cenvat Credit Rules, 2002, demanding reversal of credit amounting to Rs. 15,440. Appellants argued that duty was debited in bond at clearance, treating it as export, citing Tribunal decisions and Circular No. 283/117/96-CX.

The Tribunal noted that CT-3 certificates were issued to EOUs under a specific notification allowing duty-free procurement from other manufacturers. Revenue contended that goods were not procured directly from input manufacturer, thus EOU wasn't eligible for the notification benefit. Citing High Court and Tribunal precedents, it was held that if inputs were removed with department permission under CT-3, duty reversal was justified, entitling refund. The Tribunal emphasized that appellants had a strong case, as the situation was revenue neutral, and extended period for demand couldn't be invoked. The Commissioner's failure to discuss limitation issue rendered the demand unsustainable, leading to the appeal's rejection.

In conclusion, the Tribunal found no reason to uphold the impugned order, setting it aside and allowing the appeal with consequential relief for the appellant.

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