2011 (3) TMI 540

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.... their job worker under the cover of [Rule 3(4)] challans. The said goods after being manufactured by the job worker was being returned to their factory.   2. However, it was seen that as on 27.06.03, when the unit was converted into 100% EOU, certain inputs on which modvat credit was availed, which were sent to job worker, had not been received back by the appellants. Revenue entertained a view that in as much as the said received back goods (after the appellant had become a 100% EOU), would be utilised by them in the manufacture of the final product, which would be cleared without payment of duty, the credit availed on the inputs is not admissible to them.   3. On the above basis proceedings were initiated proposing denial....

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....OU status were neither exempted nor chargeable to nil rate and their status cannot be equated with the goods cleared without payment of duty.   6. Having held in favour of the assessee on the above issue, he held the confirmation of demand of duty by taking recourse to Rule 17 of Cenvat Credit Rules, 2002 which requires the duty should be paid by a 100% EOU only through account current which means PLA. As such the appellant cannot pay duty through cenvat credit and will not be in a position to utilise the cenvat credit at all. As such it does not make any sense to allow them to take the credit. He accordingly upheld the demand but reduced the penalty.   7. Learned advocate appearing for the appellant submits that apart from ....