The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashes excise duty demand allowing transfer of credit to Domestic Tariff Area (DTA) unit after merger, thereby granting relief to Wipro.
M/s. WIPRO Infrastructure Engineering Ltd. which was having central excise registration had an Exported Oriented Unit’ (EOU) unit which was also engaged in manufacture of hydraulic cylinders. They later got converted into DTA Unit.
The department was of the view that as per sub-rule (3) of Rule 10 of CENVAT Credit Rules, 2004, only if the ownership of capital goods / inputs is transferred to the other unit, the assessee would be eligible to have the credit transferred. The credit so transferred to the appellant-unit appeared to be not legal and proper.
Show Cause Notice was issued proposing to recover the transferred credit along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed penalty. Aggrieved by such order, the appellant is before the Tribunal.
S. Muthuvenkataraman appeared and argued on behalf of the appellant. The Counsel submitted that the capital goods and inputs lying in the stock have been transferred / merged with the appellant-unit and therefore the credit which was lying in the earlier EOU also is eligible to be transferred to the appellant unit.
The counsel argued that the 100% EOU unit having undergone the process of debonding stands in a comparable position to other similarly situated taxpayers. Therefore, the credit which has been rightly availed has to be allowed to be transferred to the merged unit in all fairness and justice.
A Two-Member Bench of the Tribunal comprising Sulekha Beevi C.S., Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “The denial of carry forward of accumulated Cenvat credit to assessee’s debonding from the ‘100% Exported Oriented Unit’ scheme to continue operations without the privileges is not correct in law and is set aside.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
