2012 (9) TMI 639 - AT - Central Excise

Return of rejected goods - re-import after export - credit taken on the basis own invoice - Held that - As observed from the copy of the Bill of Entry the goods were re-imported for reprocessing (Exported earlier) without payment of duty under bond and at the time of re-import the goods after verifying the geniuses of the condition allowed the same without payment of duty by the Customs Authority. It is also facts that the said re-imported goods after reprocess, exported the same on payments of duty. Therefore, the in terms of Rule 16, Appellants have availed the Cenvat Credit on the 700kgs of goods (duty paid vide own invoice no. R/140 dated 12.2.07 at the time of its initial export), the duty paid character thereof does not change, which was later returned for reprocessing, intimated to the department It is not necessary that in all cases an invoice is required to be issued in respect of the inputs. Where the inputs are the goods which are rejected under Rule 16, there can be circumstances where the goods come back because the purchaser may not be able to retrieve the documents from bank on payment. In such a case goods come back without being delivered to the purchaser and there cannot be any invoice. Thus in this case since the importer abroad has returned only a portion of the goods and naturally he would not raise an invoice for this purpose since goods are being returned, in such a situation if no customs duty had been paid at the time of re-importation, the assessee would not have any document issued by others but can take credit only on the basis of his own invoice - in favour of assessee.

Summary

Issues: Export of excisable goods, rejection and re-import of goods for reprocessing, availing rebate claim, denial of cenvat credit, interpretation of Rule 16 of Central Excise Rules, 2002, compliance with Customs Act, 1962 for re-importation.

Analysis:

1. Export of excisable goods and subsequent re-import for reprocessing: The respondent exported excisable goods but 700 Kgs were rejected and re-imported for reprocessing within six months. The respondent initially availed a rebate claim for the duty paid, but later withdrew it. The issue arose when the rebate claim was rejected due to being submitted beyond the stipulated one-year period. The re-importation was done without payment of duty under bond, and the goods were re-exported after reprocessing.

2. Denial of cenvat credit: The Revenue argued that the respondent could not take credit based on their own invoice for the goods cleared for export, and even if credit was allowed, it could not be proportionate. The Commissioner (Appeals) held that the credit was correctly taken, relying on Rule 16 and Board instructions. The key contention was whether the credit taken by the respondent was in accordance with the prescribed rules and procedures.

3. Interpretation of Rule 16 of Central Excise Rules, 2002: The Tribunal examined Rule 16, which allows the manufacturer to take Cenvat Credit of duty paid on goods brought back for reprocessing, treating them as inputs. The Tribunal emphasized that if the rejected goods were subjected to a process not amounting to manufacture, the duty paid on such goods should be reimbursed at the time of clearance of reprocessed goods. The Tribunal analyzed the applicability of Rule 16 in the context of the case at hand.

4. Compliance with Customs Act, 1962 for re-importation: The Adjudicating Authority raised a concern regarding the re-importation of goods not complying with Section 20 of the Customs Act, 1962. However, it was observed that the re-imported goods were allowed without duty payment under bond, reprocessed, and then re-exported after payment of duty. The Tribunal highlighted that the Cenvat Credit was correctly availed on the goods initially exported, and there was no specified time limit under Rule 16 for such credit availing.

5. Conclusion: The Tribunal, after considering the arguments and relevant provisions, upheld the Commissioner (Appeals)'s decision, emphasizing that the credit on rejected/returned goods could be allowed under Rule 16 of the Central Excise Rules, 2002. The Tribunal clarified that credit could be availed based on the assessee's own invoice in certain circumstances, ensuring revenue neutrality as the duty had to be discharged promptly. The Tribunal rejected the Revenue's appeal, stating that in cases like the present one, credit could be allowed without the issuance of an invoice for the returned goods, as long as the necessary procedures were followed.