2011 (4) TMI 834

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....ication the original adjudicating authority disallowed the credit availed on Educational Cess and S & H. E. Cess. On appeal by the assessee, the Commissioner (Appeals) set aside the Order-in-Original and allowed the credit. The present appeal is filed by the Revenue against this order.   2. The issue to be decided in the present case is whether Education Cess and S & H.E. Cess paid by 100% EOU can be taken as credit in full by the recipient manufacturing unit or it has to be limited to the extent determined by the formula provided in Rule 3(7)(a) of Cenvat Credit Rules, 2004. The department was of the view that the said formula would apply to both the types of Education Cess also whereas the appellants contended that the restriction....

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....ted in the following manner, namely:-   Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent., of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value:   Provided that the CENVAT credit in respect of inputs and capital goods cleared on or after 1st March, 2006 from an export oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification no. 23/2003-Central Excise dated 31st March, 200....

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....r Section 3 of the Central Excise Act, 1944 and nowhere refers to the Finance Act under which education cess is levied. From this, it appears that the objective of the legislature was to restrict availment of credit of BED paid by an EOU and not to restrict availment of credit of other duties leviable under the Finance Act, 1944 (Education Cess) and National Calamity Contingent Duty Act and Additional Duties of Excise (Textile and Textiles Articles) Act, etc.   6.?According to the Revenue, since Rule 3(7)(a) begins with a non-obstante clause, it overrides the provisions contained in sub-rule (1) and (4) of Rule 3 and, therefore, the only credit available to the appellants in respect of the inputs supplied by EOU will be the amount a....