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of <h1>Tribunal allows appeal on cenvat credit reversal for clearances to 100% EOU</h1> <h3>M/s Garg Ispat Udyog Pvt. Ltd. Versus C.C.E. & S.T. Alwar</h3> M/s Garg Ispat Udyog Pvt. Ltd. Versus C.C.E. & S.T. Alwar - TMI Issues:1. Whether the appellant is liable to reverse/debit the cenvat credit amounting to Rs. 4,61,809/- availed on inputs cleared to a 100% EOU.2. Interpretation of Rule 19(2) of the Central Excise Rules, 2002 regarding removal of materials without payment of duty for export-oriented manufacturing.Analysis:1. The case involved the appellant, engaged in manufacturing Mild Steel Tubes, who cleared inputs to a 100% EOU without reversing the cenvat credit availed on such inputs. The adjudicating authority confirmed the demand of cenvat credit along with interest and penalty, a decision upheld by the Commissioner (Appeals).2. The appellant contended that Rule 19(2) of the Central Excise Rules, 2002 allows duty-free removal of materials for use in manufacturing goods for export. However, the lower appellate authority rejected this plea on the basis that the appellant was not the manufacturer of the said inputs.3. The Tribunal referred to a previous decision in the case of Commissioner of Central Excise, Customs & Service Tax, Hyderabad-I vs Matrix Laboratories Ltd., where it was established that clearance to a 100% EOU based on CT-1 certificates is permissible without reversing cenvat credit. The Tribunal emphasized that the treatment for clearance of capital goods or inputs to EOUs should be similar, regardless of the source of procurement.4. Considering the above discussions and precedents, the Tribunal concluded that the impugned order demanding reversal of cenvat credit cannot be sustained. Therefore, the order was set aside, and the appeal was allowed in favor of the appellant.This judgment clarifies the applicability of Rule 19(2) of the Central Excise Rules, 2002 in cases involving clearance of inputs to EOUs and the treatment of cenvat credit in such scenarios. It underscores the importance of consistency in the treatment of clearances to EOUs, whether based on CT-1 certificates or other notifications, and highlights the relevance of past decisions in similar contexts for establishing legal principles.
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