2004 (1) TMI 511 - AT - Central Excise

Summary

Issues:
- Availment of Cenvat credit on imported capital goods exported for repairs
- Interpretation of Rule 57AC(5)(a) regarding payment of Central Excise duty
- Applicability of case law in determining duty payment
- Validity of objections raised by the Department on credit availed

Analysis:
1. The case involved the appellant availing Cenvat credit on imported capital goods that were exported back to the original manufacturer for repairs. The Department objected to the credit taken on a specific entry, leading to demands and penalties imposed by the Commissioner (Appeals).

2. The Commissioner observed that Rule 57AC(5)(a) required the appellant to pay Central Excise duty at the full rate applicable on the value determined under Section 4 of the Central Excise Act, 1944, when exporting goods for repairs. The case law cited supported the view that duty should be paid at the full rate instead of only on the amount availed on the imported goods.

3. The Commissioner rejected the appellant's arguments that the order-in-original exceeded the show cause notice's scope and that the Customs Officer's failure to charge CVD did not absolve the duty payment obligation under Rule 57AC(5)(a) and relevant case law.

4. Upon review, the Tribunal found that the appellant's claim for credit on the original BE when CVD was paid was valid, as the goods were returned after rectification and repairs by the foreign supplier. The rules allowed for the removal and return of capital goods for testing, repairs, or re-conditioning, without requiring duty payment upon return.

5. The Tribunal concluded that the lower authorities' findings regarding the duty payment requirement under Rule 57AC(5)(a) were not upheld. Consequently, the appeal was allowed in favor of the appellant, affirming the validity of the credit availed on the imported capital goods returned after repairs.