TaxTMI 
TaxTMI 
TaxTMI 
2004 (6) TMI 622
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.... Udyog Ltd. (M/s. MUL) and used in the manufacture of their final products meant for M/s. MUL. The Phoenix brand bulbs are purchased by M/s. MUL from M/s. Phoenix Lamps India Ltd., which is a 100% EOU situated at Noida Export Processing Zone, Noida. These bulbs were cleared by M/s. Phoenix Lamps India Ltd., under DTA clearance procedure in terms of Notification No. 2/95-CE dated 4.1.95. It was noticed by the department that the appellants had availed credit of full duty amount shown in the invoice of M/s. MUL as Basic Excise duty. The Basic Excise duty shown in the invoice of M/s. MUL included all the customs duties paid by M/s. Phoenix under Notification No. 2/95-CE dated 4.1.95. M/s. MUL have passed on Modvat/Cenvat Credit of the entire amount of duty paid on the Hologem Lamps purchased from M/s. Phoenix India Ltd. including the basic customs duty, surcharge SAD etc. instead of the amount equal to the additional duty of customs paid on the goods by M/s. Phoenix and supplied to M/s. MUL. It was in this circumstances show cause notice was issued to the appellants proposing to disallow the wrongly availed credit of ₹ 12,86,915/- under Rule 57I/57AH of the and also to impose pe....
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.... that in the instant case the appellants have received Phoenix brand bulbs from M/s. MUL for manufacture of final products meant for M/s. MUL to whom the Phoenix brands bulbs were supplied by M/s. Phoenix Lamps India Ltd., a 100% EOU situated at Noida Export Processing Zone, on payment of duty of excise in terms of Notfn. No. 2/95-CE dt. 4.1.95. The plea of the appellants that the supplies from M/s. MUL cannot be treated as supply from 100% EOU cannot be countenanced because, the goods were cleared to the DTA in terms of Notification No. 2/95-CE dated 4.1.1995. The appellants had initially taken the full credit of duty shown as Basic Excise duty in the invoice of M/s. MUL, but later on reversed the excess credit of ₹ 3,28,471/-, thus restricting the credit to the amount equal to the additional duty of Customs leviable in terms of Notification No. 5/94-CE (NT) dt. 1.3.94, superceded by Notification No. 21/99-CE (NT) dt. 28.2.99 as against the demand of the department that the credit admissible is required to be restricted to the duty which is equal to the additional duty actually paid in terms of Section 3 of the CTA, 1975 and not the additional duty payable. In support of the....
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....what is paid by a 100% EOU is Central Excise duty. If any Central Excise duty has been paid by a 100% EOU, while selling the goods in Domestic Tariff Area, customer becomes entitled to take Modvat credit and the extent of Modvat credit is determined by Notification No. 177/86. So we have to read notification for measuring the quantum of credit that can be taken out of total central excise duty paid on such goods.'' 5.1 We, further, note that the Larger Bench in paras 16 and 17 of their judgment has very elaborately dealt with the identical question as to how to determine the quantum of Modvat Credit available to the manufacturer in respect of the goods procured from a 100% EOU. Paras 16 & 17 are reproduced below for convenience of reference. "16. Notification No. 2/95-C.E., dated 4.1.95 provides that the goods manufactured and cleared by a 100% E.O.U. to DTA will be exempted from so much of duty of excise as is in excess of the amount calculated at the rate of 50% of each of duty of customs leviable read with any other notification for the time being in force on the like goods produced or manufactured outside India, if imported into India provided that the amount of ....
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....by the learned DR, cannot change the legal position that the duty levied on 100% E.O.U. is a duty of excise and not customs duty. 17. The question then arises is how to determine the quantum of Modvat credit available to the manufacturer in respect of the goods procured from a 100% EOU. The only method, which, we feel, is available to the Revenue is as suggested by the learned Counsel, i.e., ascertain firstly the additional duty of customs leviable on like goods, if imported into India from outside India; ascertain the actual amount of duty paid by the 100% E.O.U. on the goods cleared to any part in India under Notification No. 2/95; after ascertaining these two elements, the Modvat credit has to be allowed to the manufacturer on the basis of the first proviso to Notification No. 5/94-C.E. As per first proviso to this Notification, credit shall be restricted to the extent of duty which is equal to the additional duty leviable on like goods. If the additional duty is less than the actual duty paid on the inputs cleared from 100% E.O.U., the manufacturer in India shall be eligible only for the credit equivalent to the additional customs duty. On the other hand if the duty actually p....