Appellant wins Cenvat Credit appeal, full duty credit allowed for 100% EOU, penalty overturned

The appellant successfully challenged the denial of Cenvat Credit and imposition of penalty, arguing that the duty paid by the 100% EOU without utilizing a specific notification should be fully admissible as credit. The Tribunal ruled in favor of the appellant, allowing the full credit of duty paid by the EOU. Consequently, the impugned order was set aside, and the appeal was allowed, with the Revenue's appeal dismissed for lacking merit.

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Issues:
1. Denial of Cenvat Credit and imposition of penalty challenged by the assessee.
2. Revenue's appeal against the order allowing 25% discharge of penalty under Rule 15(2) read with Sec. 11 AC of CEA, 1944.

Analysis:
1. The appellant contested the denial of Cenvat Credit and imposition of penalty. The appellant availed credit based on Rule 3(1) of CCR, 2004, as the supplier, a 100% EOU, paid duty without utilizing the benefit of Notification 23/2003CE. The contention was that Rule 3(7) of CCR, 2004 applies only if the 100% EOU availed the mentioned notification's benefit. The duty paid by the EOU under Sec. 3(1) of CEA, 1944 was argued to be fully admissible as credit, referencing precedents like M/s Gopala Polyplast Ltd and M/s Umasree Texplast P Ltd. The Revenue's appeal reiterated the Commissioner (Appeals)'s findings.

2. The core issue revolved around the admissibility of Cenvat Credit for duty paid by the 100% EOU, M/s Reliance Industries Ltd, without utilizing Notification 23/2003CE. The Revenue contended that the credit should be limited as per the formula under Sec. 3(7) of CCR, 2004, regardless of the EOU's benefit from the mentioned notification. The Tribunal analyzed the said provision and highlighted the calculation method for admissible credit when a 100% EOU pays excise duty under Sec. 3 of the Excise Act,1944 read with the specific notification. Since the supplier did not avail the concessional duty rate as per the notification, the Tribunal, citing previous judgments, ruled in favor of the appellant, allowing full credit of duty paid by the EOU. Consequently, the impugned order was set aside, and the appeal was allowed, with the Revenue's appeal dismissed for lacking merit.

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