2017 (2) TMI 301 - AT - Central Excise

EOU entitled to credit for duty paid; not restricted to CVD alone.

The Tribunal clarified that the credit of duty paid by a 100% EOU is available, subject to restriction up to the additional duty of Customs leviable on ... CENVAT credit - duty paid by 100% EOU under N/N. 2/95-CE dt. 4.1.1995 - The differential cenvat credit between the CVD & total duty was denied by the adjudicating authority interpreting the restriction provided under Rule 57AB (2) of the Central Excise Rules, 1944. Held that: - whatever duty was paid by EOU is available as credit. Subject to restriction upto the additional duty of Customs leviable on the like goods if imported into India. That means in a normal course, if the goods are imported into India then whatever CVD is payable the credit of duty paid by EOU shall be restricted to that CVD. Therefore, the contention of the Revenue is absolutely incorrect that the credit only in respect of CVD paid by the EOU is available. The CVD payable in case of import is ₹ 20/-whereas the total duty paid by EOU is ₹ 25.40/-but the Cenvat credit will be admissible to the extent of ₹ 20/-. In view of above, neither the respondent s claim is correct nor is of the department. However, from the above calculation it can be seen that the total duty paid by the EOU is not available as a credit to the respondent, therefore it needs to be re-quantified and credit will be restricted to the CVD payable on the like goods as if imported into India. Appeal allowed by way of remand. Issues:Interpretation of Rule 57AB(2) regarding availment of Cenvat Credit by 100% EOU.Analysis:The case involved the appellant availing Cenvat Credit of duty paid by a 100% EOU under Notification No. 2/95-CE. The adjudicating authority contended that the credit is only available to the extent of additional duty paid by EOU, excluding Basic Excise Duty, CVD, and SAD. The Commissioner (Appeals) allowed the appeal following the decision of the Larger Bench in Vikram Ispat case. The Revenue appealed, arguing that as per Rule 57AB(2), the credit should be restricted to CVD only. The respondent argued that the entire duty paid by EOU is excise duty and should be admissible as credit. They relied on the Vikram Ispat case and their own case, Pepsico India Holdings Ltd. The issue revolved around the interpretation of Rule 57AB(2) for availing credit of duty paid by 100% EOU.The Tribunal analyzed Rule 57AB(2) and found that the credit of duty paid by EOU is available, subject to restriction up to the additional duty of Customs leviable on like goods if imported into India. The Tribunal clarified that the credit should not be restricted only to CVD paid by EOU. The judgment provided a detailed calculation example to illustrate the restriction of credit based on the duty payable by EOU compared to the CVD payable on similar imported goods. The Tribunal concluded that neither the respondent's claim nor the Revenue's contention was entirely correct. The impugned order was set aside, and the matter was remanded to the adjudicating authority for re-quantification of the Cenvat amount and a fresh order. The Tribunal allowed the appeal by way of remand to the original adjudicating authority for further proceedings.In conclusion, the judgment clarified the interpretation of Rule 57AB(2) regarding the availment of Cenvat Credit by 100% EOU, emphasizing that the credit should not be restricted solely to CVD paid by EOU. The Tribunal provided a detailed analysis and calculation example to support its decision, setting aside the impugned order and remanding the matter for re-quantification of the Cenvat amount.