2016 (8) TMI 346

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....he appellant reorganized a part of the assets of their DTA unit into : (1) a new 100% EOU in the name and style of "EOU-Oral" and (2) merged some portion of the original unit alongwith another existing 100% EOU in the name and style of "EOU-Pril". Some of the capital goods in which Cenvat credit was availed in the original DTA unit was segregated as part of the two EOUs, as above. Even though there was no removal of capital goods from the original DTA factory, the demand to the tune of over Rs. 1 crore was confirmed in the impugned order towards reversal of Cenvat credit under Rule 3 (5) of the Cenvat Credit Rules, 2004 which reads as follows :- "When inputs or capital goods, on which Cenvat credit has been tak....

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....earned DR for the Revenue. Rule 3 (5) of the Cenvat Credit Rules contemplates payment of an amount equal to the credit availed in respect of inputs and capital goods when such goods are removed as such from the factory. The thrust of the appellant's argument is that the removal contemplated in the above Rule is the physical removal, of the inputs or capital goods on which credit is taken, from the factory of the manufacturer. In the present case in as much as the inputs and capital goods were not removal physically from the factory and, hence, the mischief of Rule 3 (5) will not be invited. We find considerable force in the argument advanced by the appellant. We also find that the issue is no longer res-integra in as much as identical issue....

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....itled to transfer of credit lying in the books of accounts at the time of conversion from DTA to 100% EOU and therefore the impugned demands are not sustainable. Thus, the appeal is allowed with consequential relief, if any." 6. In view of the above position, we do not find any merits in the contention of the Revenue. We also note that the Board Circular No. 77/99-Cus. quoted does not elaborate under what provision the unutilised credit will stand lapsed. In any case, the said circular was issued when Rule 100H under old Central Excise Act, 1944 were existing and at that point of time 100% EOU were outside the scheme of modvat/Cenvat credit, which is not so after the CENVAT Credit Rules, 2004 have come into existence. The present c....