Cenvat credit inputs may be cleared duty-free to a 100% EOU against CT-3 certificate.

Inputs on which Cenvat credit had been availed were treated as excisable goods capable of clearance without payment of duty against a CT-3 certificate under Notification No. 22/2003-CE. The Tribunal applied the earlier view that Rule 19(2) of the Central Excise Rules permits such duty-free clearance even where the goods are inputs and not goods manufactured by the assessee, and that the notification benefit extends to clearances made to a 100% EOU against CT-3. On that basis, the issue was decided in favour of the appellants and the demand and penalties were held unsustainable.

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Issues: Whether inputs on which Cenvat credit had been availed could be cleared without payment of duty against CT-3 certificate under Notification No. 22/2003-CE.

Analysis: The Tribunal applied the earlier view that inputs on which credit has been taken may be treated as excisable goods for the purpose of clearance, and that clearance without payment of duty is not confined only to goods manufactured by the assessee. Relying on the reasoning accepted in prior decisions, the Tribunal held that Rule 19(2) of the Central Excise Rules permits such clearance and that the benefit of the notification is available when the inputs are cleared to a 100% EOU against CT-3 certificate.

Conclusion: The issue was answered in favour of the appellants, and the demand and penalties were unsustainable.

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