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2015 (3) TMI 779 - CGOVT - Central ExciseDenial of Rebate claims on reexport of capital goods as such - whether reversal of cenvat credit under rule 3(4)/ 3(5) of Cenvat Credit Rule 2004 on removal of inputs / capital goods as such is to be treated as payment of duty for the purpose of sanctioning rebate claim under rule 18 of CER 2002 read with Not. No. 19/04-CE(NT) dated 6.9.2004 - Held that - an amount reversed under rule 3(4) / 3(5) of Cenvat Credit Rules 2004 on removal of inputs / capital goods as such payment of duty of excise for the purpose of sanctioning rebate claim under rule 18 of Central Excise Rules 2002 read with Not. No. 19/04-CE(NT) dated 6.9.2004 - that applicant has cleared the capital goods as such for export after payment of duty by way of reversal of cenvat credit under Rule 3(5) of Cenvat Credit Rules 2004. Therefore, the rebate claim is admissible to the applicant under Rule 18 of Central Excise Rules 2002 read with Notification No.19/04-CE(NT) dated 6.9.04 subject to the condition that the provision of Notification No.19/04-CE(NT) dated 6.9.04 are complied and rebate claim is otherwise in order. - Following decision of Sterlite Industries Ltd. Raigarh 2011 (3) TMI 1556 - BOMBAY HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Rebate claims for duty paid on the export of capital goods. 2. Interpretation of Rule 3(5) and Rule 3(6) of Cenvat Credit Rules, 2004. 3. Treatment of duty payment through reversal of Cenvat credit. 4. Applicability of previous judicial decisions and orders. 5. Compliance with Notification No. 19/04-CE(NT) dated 6.9.04. Detailed Analysis: 1. Rebate Claims for Duty Paid on the Export of Capital Goods: The applicant, M/s Miraj Power Services, filed four rebate claims for the duty paid on the export of capital goods procured from different manufacturers. The claims were initially rejected by the adjudicating authority and subsequently by the Commissioner (Appeals), on the grounds that the amount reversed under Rule 3(5) of the Cenvat Credit Rules, 2004, does not constitute duty payment. 2. Interpretation of Rule 3(5) and Rule 3(6) of Cenvat Credit Rules, 2004: The applicant argued that under Rule 3(5), the reversal of Cenvat credit on the removal of capital goods as such is treated as payment of duty. Rule 3(6) further supports this interpretation by stating that any amount reversed under Rule 3(5) is considered duty payment. The applicant relied on the judgment of the Hon'ble High Court of Bombay in the case of CCE, Raigad Vs. M/s. Micro Inks Ltd., which held that duty paid by reversing the credit does not lose its character as duty. 3. Treatment of Duty Payment through Reversal of Cenvat Credit: The applicant contended that the reversal of Cenvat credit should be treated as payment of duty. This argument was supported by various decisions, including those of the Joint Secretary in similar cases, such as M/s C.C.E, Raigad vs. Cello International Pvt. Ltd., M/s Century Enka Ltd., Pune, and M/s Chiripal Industries Ltd., Ahmedabad. These decisions established that the reversal of Cenvat credit on removal of inputs or capital goods as such is treated as payment of duty for the purpose of Rule 18 of the Central Excise Rules, 2002. 4. Applicability of Previous Judicial Decisions and Orders: The government observed that the issue of whether the reversal of Cenvat credit on the removal of inputs/capital goods as such is treated as payment of duty has been settled by previous GOI revision orders and upheld by the Hon'ble High Court of Bombay. The court dismissed the department's writ petitions and upheld the GOI revision orders, confirming that the reversal of credit is a recognized method of duty payment. 5. Compliance with Notification No. 19/04-CE(NT) dated 6.9.04: The government held that the applicant had complied with the provisions of Notification No. 19/04-CE(NT) dated 6.9.04. The rebate claim was admissible under Rule 18 of the Central Excise Rules, 2002, as the capital goods were cleared as such for export after payment of duty through the reversal of Cenvat credit. Conclusion: The government set aside the impugned order-in-appeal, allowing the revision application and granting the rebate claim to the applicant. The decision was based on the legal position that the reversal of Cenvat credit under Rule 3(5) of the Cenvat Credit Rules, 2004, constitutes payment of duty, and the rebate claim is admissible under Rule 18 of the Central Excise Rules, 2002, read with Notification No. 19/04-CE(NT) dated 6.9.04.
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