2009 (6) TMI 802 - AT - Central Excise

Summary

Issues involved: Interpretation of condition in Notification No. 40/2006-Cus regarding availing of Cenvat Credit for imported goods against duty free import authorization.

In the present case, the appellants availed benefit of Notification No. 40/2006-Cus for imports against duty free import authorization, subject to the condition that Cenvat Credit under Cenvat Credit Rules, 2004 for the imported materials has not been availed. The Revenue contended that since the appellants had availed Modvat Credit for locally manufactured goods, they should be denied the benefit of the notification. The dispute centered around the interpretation of the condition regarding availing of credit for imported goods only.

The appellants argued that the condition of non-availment of credit applied only to materials imported against the authorization, not to locally procured goods for which they had taken credit. They also pointed out that denial of the Customs notification, not recovery of the credit, should be the consequence if a condition was not met. The issue was whether the appellants fulfilled the condition of the notification by not availing credit for the imported goods.

The Tribunal referred to a letter from the Dy. Director General of Foreign Trade and a decision of the Bangalore Bench of the Tribunal in a similar case, both supporting the view that availing credit for domestically procured inputs did not disqualify the appellants from the benefit of the notification. Relying on this precedent, the Tribunal ruled in favor of the appellant, allowing the appeals and granting consequential relief.

(Separate Judgment by Judge: None)