CA Bimal Jain
Disham Pharmaceuticals and Chemicals Pvt. Ltd. (“the Appellant”) was manufacturing pharmaceuticals and chemical products, in their factory located at a village, which was allowed to be operated as a 100% Export Oriented Unit (“EOU”). The Appellant filed an application for partial de-bonding, which is permissible under the EOU Scheme. However, the Department informed that the Appellant has to pay the Excise duty foregone on the goods lying unutilized in the Petitioner’s plant that was proposed to be de-bonded, in cash and not from Cenvat credit by referring to Rule 3(4) of the Credit Rules. Whereas the Appellant wanted to pay the duty amount through Cenvat Credit and it was submitted that an EOU is also a manufacturer and therefore, all the benefits allowed to any manufacturer under the Central Excise law are also admissible to an EOU at the time of de-bonding.
The Hon’ble High Court, Gujarat relying upon the Order addressed by the Department to Alps Chemicals Pvt. Ltd. on the same facts and judgment in the case of Ralli Engine Ltd. Vs. Union Of India [2004 (4) TMI 590 – Gujarat High Court], held that the Appellant is permitted to pay the Excise duty foregone from the legally availed Cenvat credit account. Further, upon the Excise duty being paid through the Cenvat credit account, the Department shall issue “No Dues Certificate” to the Appellant for de-bonding out of 100% EOU Scheme.
(Author can be reached at Email: email@example.com)
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018