2007 (8) TMI 593 - Commissioner - Central Excise

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Liability to pay duty on removal of used capital goods under Rule 3(5) of the Cenvat Credit Rules, 2004.
3. Entitlement to rebate for exported capital goods under Rule 18 of the Central Excise Rules, 2002.

Summary:

1. Condonation of Delay:
The appeal was delayed by 8 days due to the appellant being busy with an Income Tax audit and mistakenly believing the appeal had already been filed. The delay was condoned u/s 35-I.

2. Liability to Pay Duty on Removal of Used Capital Goods:
The appellant argued that they were not liable to pay duty on exported capital goods u/s Rule 3(5) of the Cenvat Credit Rules, 2004, which applies to goods removed "as such" from the factory. The term "as such" was interpreted to mean goods in their original form, not used goods. The appellant cited Rule 57S(2) of the erstwhile Central Excise Rules, 1944, which allowed for duty at depreciated value for used capital goods, a provision absent in the current rules. The judgment acknowledged that Rule 3(5) does not cover used capital goods and agreed with the appellant that no duty was payable on the exported used capital goods.

3. Entitlement to Rebate for Exported Capital Goods:
The appellant claimed a refund of Rs. 25,72,312/- for duty paid on exported capital goods under Rule 18 of the Central Excise Rules, 2002. The department had initially rejected this claim, arguing that the appellant had availed credit on the capital goods and was liable to pay duty on their removal. However, the judgment noted that the Central Board of Excise and Customs (CBEC) Circulars No. 807/4/2005-CX and No. 283/117/96-CX clarified that no duty is payable on exported goods and that exports under bond and under rebate are at parity. The judgment concluded that the appellant was entitled to a rebate as the goods were exported, setting aside the Deputy Commissioner's order and granting consequential relief.

Discussions and Findings:
The judgment emphasized that the CBEC Circular dated 29-8-2000 allows for the export of capital goods under bond without payment of duty, equating it with the removal of final products. The Deputy Commissioner's refusal to allow bond clearances was deemed incorrect. The judgment also highlighted that once duty was collected on exported goods, there was no bar on granting a rebate, thus entitling the appellant to the claimed refund.