2017 (1) TMI 796

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....d percent EOUs is in appeal against order of Commissioner (Appeals) whereby the disallowance of Cenvat credit have been upheld. 3. As per SCN dated 16/10/12 the appellant had applied for refund of Rs. 4,60,11,733/- under Rule 5 of Cenvat Credit Rules, 2004, read with notification number 5/2006 CE on account of accumulated Cenvat credit received on and admissible input services availed by them and used in the manufacture of finished goods which were cleared for export under Bond/LUT for the period April, 2010 to March, 2012. It appeared to revenue that the appellant, as they are clearing their finis had products without payment of duty, they are not entitled to Cenvat credit in terms of Rules 6(1) read with 6(4) of CCR, 2004. Accordingly,....

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....d services or input service used in or in relation to the manufacture of exempted services. However, it has been pointed out by the appellant that sub rule 6 of Rule 6 of the Cenvat credit Rules provides that the sub rule (1), (2), (3) and (4) shall not be applicable in case the excisable goods are cleared to a 100% export oriented undertaking. 11.1. Since duty has been demanded on different and unrelated issues, the Bench decided to address each of these separately. The Revenue has sought to deny cenvat credit availed by the applicant on inputs, capital goods and input services. This denial is in terms of Rule 6(1) of the Cenvat Credit Rules. The applicant had taken cenvat credit amounting to Rs. 23,94,652/- on inputs, Rs. 15,53,0....

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.... avail cenvat credit on duty paid inputs acquired by them, since supplies to a 100% EOUs are free of excise duty. 11.4 However, service tax would be on a different footing. There is no exemption from service tax on services utilized by a 100% EOUs. The Bench observed that the applicant would be entitled to avail Cenvat Credit of the Service Tax paid by them on the input services utilized by them proportionately to the extent of the value of goods exported. The applicant also submitted that Chapter 6 of the Foreign Trade Policy (FTP) 2009-2014 contains provisions relating to 100% EOUs. Para 6.11C(iv) provides that 100% EOUs will be entitled to cenvat credit on the service tax paid on the services provided to 100% EOUs. In fact Rule ....