2012 (12) TMI 147

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....eal No. 720/2011 relates to import of capital goods by DTA unit and transferred to 100% EOU of the importer. The facts in both cases and issues involved are closely interlinked and, therefore, they are being dealt with by this common order. 2.1 The relevant facts, in brief, are as follows : (a) M/s. MIC Electronic Ltd. is into manufacture of LED Display Systems, PCB assemblies. They have two units one at Kushaiguda (hereinafter referred to as DTA unit) which started manufacturing from December 2007 and another unit a 100% E.O.U. at Cherlapally (hereinafter referred to as E.O. unit). (b) The DTA unit imported capital goods valued at Rs. 1,93,13,208/- during the period December 2007 to March 2008; they imported the goo....

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....Original No. 12/2010-Cus-Commr.-Hyd III/Adjn. dated  30-7-2010 ordered confiscation of the goods seized from EO unit and ordered appropriation of bank guarantee of Rs. 28,96,982/- towards fine in lieu of confiscation. He demanded differential customs duty of Rs. 18,01,111/- along with interest from the DTA unit; he imposed a penalty of Rs. 5,00,000/- on the DTA unit and he also imposed a penalty of Rs. 5,00,000/- on the EO unit. Against this order, the appellants have filed Customs Appeal No. C/2302/2010 along with Stay Petition No. 1390/2010. The stay petition was disposed of vide Stay Order No. 844/2011, dated 19-9-2011 with the following directions : "Taking the entire facts and circumstances of the case, we deem it appropriate t....

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....fect that - "the counsel for the applicant at the time of hearing of the stay application is not aware of the pendency of the appeal and stay application with respect to reversal of the CENVAT credit and therefore the same could not be brought to the notice of this Hon'ble Tribunal. Since the reversal of the CENVAT credit is the subject matter of Appeal No. E/720/2011, the Hon'ble Tribunal may modify the Stay Order No. 844 dated 19-9-2011 and the condition relating to the reversal of CENVAT credit on capital goods may be deleted. The applicant will comply with the orders that may be passed in Stay Application filed in Appeal No. E/720/2011 relating to reversal of CENVAT credit." 3.2 Moving the stay application arising out of orde....

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....d as  follows : "Taking the entire facts and circumstances of the case, we deem it appropriate to waive pre-deposit of duty demanded and penalty imposed on the appellant/applicant." 6.1 Now, we take up stay petition No. 459/2011. 6.2 We find that the DTA unit has received the capital goods and the same has not been put into use for manufacture of excisable goods and the same have been removed as such. The authorities below have held that inter-unit transfer of CENVAT/capital goods without reversal of credit by the DTA unit is in contravention of provisions of Rule 3(5) of CENVAT credit Rules, 2004. It has also been held that the rule does not provide any exceptions i.e. whether the removals are to their own another u....