TaxTMI 
TaxTMI 
2016 (6) TMI 827
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....r consideration are that the appellant herein is Central Excise registered assessee manufacturing Air Conditioner kits for passenger vehicles falling under Chapter sub-heading 8415.00 of Central Excise Tariff Act, 1985. In the month of April, 2002, the appellant had carved out a portion in the factory premises and converted the same into Behr India Pvt. Ltd. 100% EOU and registered the premises with the authorities as 100% EOU and deleted the said portion from the ground plane of Behr India Ltd. The assessee when cr carved out a 100% EOU, they also transferred MODVAT/CENVAT Credit availed capital goods and inputs. It is the case of the Revenue in the show-cause notice that the appellant should have reversed the MODVAT/CENVAT Credit attribut....
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.... submit that for the period in dispute in this case, the provisions of Cenvat Credit Rules did not have anything to indicate that the credit should not be availed by an EOU nor there was any rule that credit should be availed. He would submit that in the case of Sandoz Pvt. Ltd. and in the case of Sandvik Asia Ltd., this issue was gone into by Bench and held in favour of the assessee. It is his submission that reading of provisions of Rule 17 of Central Excise Rules, 2002 and Cenvat Credit Rules, 2002, the issue is very clear that appellants need not reverse any MODVAT/CENVAT Credit on inputs and capital goods. It is his further submission that assuming that the appellant is not eligible or needs to reverse the CENVAT Credit, the said CENVA....
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.... to reverse the MODVAT/CENVAT Credit availed on capital goods and inputs which were procured by them when transferred to 100% EOU within the factory premises or otherwise. Undisputed facts are that the appellant is eligible to avail CENVAT Credit on the capital goods and the inputs; the 100% EOU established in the place which was registered with the authorities as a factory of the appellant; subsequently after establishing of 100% EOU appellant had deleted that portion of the land from the approved premises as a DTA unit and they had transferred the capital goods and inputs to 100% EOU. 5.2 On this factual matrix, we notice that the inputs and capital goods were within the factory premises of the appellant even after carving out of the E....
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....f the said plant was, in accordance with procedure prescribed in the Foreign Trade Policy, converted as a 100% Export Oriented Unit and the available stock of raw materials and work-in-progress was placed at its disposal for use in production. Prior to conversion on 1 st September 2004, the assessee had utilised the entire credit available in the CENVAT Credit account for discharge of excise duty liability. 3. The case of Revenue was that, though CENVAT Credit was taken on the entire raw material procured by it, usage of a part of it by the 100% Export Oriented Unit after 1st September 2004 was tantamount to removal and non-utilisation for manufacture of excisable goods; such removal should have been preceded by reversal of the cre....
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.... CENVAT Credit been reversed by the erstwhile unit before he conversion, the newly minted Export Oriented Unit would be entitled to avail CENVAT Credit of like amount. These circumstances of revenue neutrality are a clear pointer to the rationale for redundancy of a specific provision for such an event in the CENVAT Credit Rules. 8. We also find that not only is there no revenue impact but that there is no transfer at all. The role of M/s Sandvik Asia Ltd in the manufacturing premises remains unchanged. There is no transfer to speak of, much less removal of raw materials. Hence, the provision of CENVAT Credit Rules cited by the original authority to confirm the demand is clearly inapplicable." While coming to such a conclusion a....