Per M.V. Ravindran : This appeal is directed against the order-in-appeal No. PII/KS/303/2006 dated 17.11.2006.

2. Considered the submissions made by both sides and perused the records.

3. The issue involved in this case is whether the appellant after debonding himself from EOU to DTA is eligible to avail the credit of the amount of duty paid on indigenously procured capital goods or not.

4. Ld. Commissioner (Appeals) while holding in favour of the respondents came to the following finding:-

"I have carefully gone through the records of the case and considered the submissions of the appellants. The adjudicating authority has confirmed the demand on the ground that Rule 3 of Cenvat Credit Rules, 2002 nowhere mentions of taking credit of amount equal to Central Excise duty and therefore, the disputed amount being an amount equal to excise duty is not eligible to be availed by the appellants. The contention of the appellants in this regard is that from plain reading of para 8 of the Notification No. 22/2003-CE and para 6.20 of Chapter 6 of Export Import Policy 2002-07 and para 29.1 of Appendix 14-1; to the Handbook of Procedure, 2002-07, it is sufficient to prove that the 100% EOU at the time of debonding is bound to pay Central Excise duty on the indigenously procured capital goods; that if the above said paras of Export Import Policy and Handbook of Procedure are read together with para 8 of Notification No. 22/2003-CE, it can be realized that they have correctly availed the credit of the said Central Excise duty. In this regard, it is seen that the Board vide Circular No. 185/19/96-CX. dated 19.03.96 has clarified that Modvat credit can be allowed to the extent of CVD paid on imported capital goods or procured from domestic market and this does not talk of denial of modvat credit of the amount equal to the Central Excise duty paid at the time of debonding of capital goods. At the time of debonding the amount equal excise duty which is paid has to be treated as payment of excise duty only. This is sufficiently clear on a combined reading of para 6.20 of Exim Policy 2002-07 and para 29.1 of Appendix 14-1 of Exim Policy 2002-07. There is therefore no merit in the stand of the department. In view of the above, the appellants are entitled to Cenvat credit of Central Excise duty paid at the time of debonding of the capital goods. As the demand does not survive, interest and penalty also do not survive".

5. As against the above said finding, it is the contention of the Ld. SDR that the appellant is allowed to take credit on duty paid on amount as CVD. The said contention of the SDR is correct, if the appellants had paid the CVD and other duties applicable on the imported goods. In this case it is not so. This being the factual matrix, the finding arrived at by the Commissioner (Appeals) in allowing the appeal and setting aside, the order-in-original is correct and does not require any interference. It is also seen that the issue is squarely covered by the decisions of the Division Bench as reported at 2007 (210) ELT 241 (Tri.-Bang.) in favour of the respondent.

6. Accordingly, I find that the impugned order is correct and does not require any interference. The appeal filed by the revenue is rejected.