2010 (10) TMI 993 - AT - Central Excise

CENVAT credit - It was alleged against the appellant that they are not entitled to avail cenvat credit on finished goods - Held that - The Board s Circular No. 283/117/96-CX., dated 31-12-1996 has clarified that if the inputs are exported as such on that also the cenvat credit is available to the assessee - the appellant has taken cenvat credit on the finished goods when they were brought top their factory but instead of any process they exported the same on payments of duty as such. From the clarification of the Board and as per Rule 16 of CER, 2002, the appellant is entitled to Cenvat credit on the same - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of Cenvat credit on finished goods.

Analysis:
The appellant availed Cenvat credit on grey fabrics and finished goods, leading to a denial of credit and imposition of penalty. The appellant contended that Rule 16 of Central Excise Rules, 2002 allows credit on finished goods exported after payment of duty. Referring to Circular No. 283/117/96-CX by CBEC and a previous Tribunal decision, the appellant argued for credit entitlement. The DR supported the lower authority's decision.

Upon examination, Rule 16 permits credit on goods brought for re-making, refining, or other reasons. The Circular clarifies credit availability even when inputs are exported as such. The Tribunal's past ruling allowed goods brought for testing and repacking to be treated as removable as such. Consequently, as the appellant exported finished goods after bringing them to the factory, credit entitlement was upheld under Rule 16 and CBEC's Circular. The impugned order was set aside, and the appeal was allowed.