2015 (2) TMI 426 - AT - Central Excise

Availment of Suo moto re-credit on cancellation of rebate claim - Export of goods - 100% EOU - they have filed rebate claim - Thereafter the appellants requested the Department to cancel the rebate claim. - Since no reply received from the department, they have availed suo motto re-credit in their cenvat account. - Held that - appellants are eligible to avail cenvat credit on the inputs. In the present case, once the appellants rebate claim is cancelled they are entitled to take re-credit in their cenvat account. Accordingly, I hold that the appellants are eligible for re-credit of the amount in their cenvat account. The penalty imposed on the appellants is set aside. Accordingly, the impugned order is set aside - Following decision of assessee's own previous case - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of 100% EOU to avail cenvat credit on exported goods.
2. Entitlement to take suo-motto re-credit in cenvat account.
3. Imposition of penalty under Rule 15 of CCR.

Analysis:

Issue 1:
The appellants, a 100% EOU registered with Central Excise, exported goods on payment of duty and filed a rebate claim which was later canceled by them. The question arose whether the appellants are eligible to avail cenvat credit on the inputs used in the exported goods. The Tribunal, in a previous case, had ruled in favor of the appellants, stating that there was no prohibition for EOUs to claim such credit. The Tribunal held that the appellants were entitled to avail cenvat credit on inputs used in the manufacture of export goods. The relevant statutory provisions did not bar EOUs from taking such credit.

Issue 2:
Regarding the entitlement to take suo-motto re-credit in the cenvat account, the Tribunal referred to previous cases and held that there was nothing in the relevant Rule 5 of CCR prohibiting an EOU from claiming and obtaining a refund of accumulated cenvat credit. It was established that EOUs could legitimately claim refund of excise duty borne on inputs used in the production of export goods. Therefore, the appellants were deemed eligible for re-credit of the amount in their cenvat account once their rebate claim was canceled.

Issue 3:
The adjudicating authority had imposed a penalty of Rs. 1,00,000 under Rule 15 of CCR. However, the Tribunal set aside this penalty, following its decision on the eligibility of the appellants to avail cenvat credit and take re-credit in their cenvat account. The impugned order was set aside, and the appeal was allowed in favor of the appellants.

In conclusion, the Tribunal's decision upheld the appellants' eligibility to avail cenvat credit on inputs used in exported goods and to take re-credit in their cenvat account. The penalty imposed on the appellants was set aside based on the Tribunal's findings.