2009 (12) TMI 770 - AT - Central Excise

Reversal of CENVAT credit - availment of Value Based Advance Licence (VBAL) Scheme - fulfillment of export obligation - input stage credit not to be taken u/r 56A or Rule 57A of the CER 1944 - Held that - Each of the exports made under the VBAL was converted into one made under QBAL. There is no bar on availment of credit under N/N. 204/92 governing holders of the QBAL. In the case of Chandrapur Magnet Wires (P) Ltd. v. CCE 1995 (12) TMI 72 - SUPREME COURT OF INDIA , reversal of credit taken on inputs and exemption being claimed in the finished product under a notification has been approved by the Apex Court holding that claim for exemption cannot be denied on the ground that the assessees had taken credit on duty paid inputs used in the manufacture of the goods in the event of reversal of the credit taken. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Availment of exemption from payment of Customs duty under Notification No. 203/92-Cus.
2. Reversal of input stage credit contrary to notification requirements.
3. Conversion of Value Based Advance Licence (VBAL) into Quantity Based Advance Licence (QBAL).
4. Request for recredit of the amount paid through PLA or debited in RG.23A Register.

Analysis:

1. The case involved the respondents, registered manufacturers of inorganic chemicals, who imported goods under Value Based Advance Licence (VBAL) and availed exemption from Customs duty under Notification No. 203/92-Cus. The condition for exemption required achieving export obligation without obtaining input stage credit under specific Central Excise Rules. However, the respondents had availed input stage credit, leading to the reversal of the credit or payment in cash through PLA to comply with the notification.

2. Subsequently, the respondents applied for converting their VBAL into Quantity Based Advance Licence (QBAL) under Notification No. 204/92-Cus. The QBAL holders were allowed to avail credit under certain rules without any transfer of the license. The assessees requested recredit of the amount paid through PLA or debited in RG.23A Register, which was initially rejected by the adjudicating authority but later permitted by the Commissioner (Appeals), leading to the Revenue's appeal.

3. The Tribunal noted that each export under VBAL was converted into QBAL, and there was no restriction on availing credit under Notification No. 204/92 for QBAL holders. Referring to the case of Chandrapur Magnet Wires (P) Ltd. v. CCE [1996 (81) E.L.T. 3 (S.C.)], the Tribunal highlighted that the Apex Court had approved the reversal of credit taken on inputs while claiming exemption in the finished product under a notification. The Tribunal upheld the decision, citing that denial of exemption due to availing credit on duty paid inputs was not justified in case of credit reversal.

4. Consequently, the Tribunal found no grounds to interfere with the impugned order, affirming the decision to permit recredit and rejecting the Revenue's appeal. The judgment emphasized the compliance with notification requirements, the legality of credit reversal, and the applicability of exemption claims in such scenarios, providing a comprehensive analysis of the issues involved in the case.

Judgment Summary:
The Appellate Tribunal CESTAT CHENNAI addressed issues related to availing exemption under Notification No. 203/92-Cus, reversal of input stage credit, conversion of VBAL to QBAL, and recredit requests. The Tribunal upheld the decision allowing recredit, emphasizing compliance with notification conditions and legal precedents supporting exemption claims despite credit reversal. The judgment provided a detailed analysis of each issue, ensuring clarity on the application of rules and notifications in the case.