2015 (9) TMI 1487

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ppellant established an EOU unit in Hyderabad which was lying adjacent to their old premises. This EOU had been granted 100% EOU status. 1.2 Appellant stated that they de-bonded the EOU unit through their letter dated 24-8-2007 and Development Commissioner, Visakhapatnam Special Economic Zone (VSEZ) gave them permission to exit from EOU scheme after payment of applicable duties. 2. The Assistant Commissioner, Central Excise of the jurisdictional area asked the appellant to pay duties of Rs. 75,78,974/- (Rupees Seventy Five Lakhs Seventy Eight Thousand Nine Hundred and Seventy Four only) in case of capital goods, computer workstation, gauges and tools and duty of Rs. 35,06,864/- (Rupees Thirty Five Lakhs Six Thousand Eight Hundre....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....msp;The appellant points out that during the departmental audit, the objection was made saying that the appellant took irregular credit by way of transfer of credit from EOU unit on 27-12-2007 lying unutilized in the accounts of EOU unit at the time of de-bonding and exit from the EOU. 3. Formal proceedings started against the appellant by issue of show cause notice dated 4-12-2008 for recovery of Cenvat credit of Rs. 1,91,10,912/- (Rupees One Crore Ninety One Lakhs Ten Thousand Nine Hundred and Twelve only) which was taken by the appellant by way of transfer from the de-bonded EOU unit. In this case Commissioner passed the order-in-original dated 28-12-2009 confirming the demand of duty of Rs. 1,91,10,912/- (Rupees One Crore Ninety O....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... restricts the entitlement of Cenvat credit when the unit exits from an EOU scheme. (iii)  When the appellant has not contravened any provisions of Cenvat Credit Rules no penalty can be imposed on them under Rule 15 of Cenvat Credit Rules, 2004. The appellant in support of this cites the following decisions : (a)  Hindustan Steel Ltd. v. State of Orissa - AIR 1970 (SC) 253 = 1978 (2) E.L.T. (J159) (S.C.) (b)   Kellner Pharmaceuticals Ltd. v. CCE - 1985 (20) E.L.T. 80 (c)   Tamil Nadu Housing Board v. CCE - 1994 (74) E.L.T. 9 (S.C.) 4. The learned DR on behalf of the respondent mainly argues that this transfer of credit is not covered by the provisions of Rule 10 and states that the appellant made f....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....at credit balance, why and which law/rule prohibits transfer of the unutilized credit balance lying with the other unit? In this case the successor unit is DTA unit and this DTA unit is part of the same ownership. 5.2 The main case law cited by the appellant in support is GTN Exports Ltd. v. CCE (supra) decided by the CESTAT, Chennai. In this case CESTAT allowed an EOU to take the credit of its predecessor domestic tariff area unit (DTA unit) citing that Rule 10 of Cenvat Credit Rules did not prohibit availment of such credit at the time of conversion of DTA to EOU. By applying the same rational we are unable to understand how the department would prohibit an EOU, when it is converting itself to a DTA scheme, to take the credit of the....