2015 (10) TMI 1119 - AT - Central Excise

Denial of CENVAT Credit - Credit on CVD - Capital goods - held that - The appellant took Cenvat credit on CVD paid on these capital goods. Some part of the capital goods was found to be defective and same was re-exported for repairs. The appellant reversed the Cenvat credit attributable to the parts exported for repairs. After repairs the capital goods received back by the appellant after CVD paid on the value addition done on account of repairs. The appellant took the Cenvat credit on CVD paid on value addition plus Cenvat credit reversed at the time of export. From the above facts it is clear that when the goods were sent for repairs by the appellant they have reversed the credit. Therefore, appellant are entitled to take Cenvat credit on receipt of the capital goods after repairs. In these circumstances, I hold that appellant is entitled to take Cenvat credit and Cenvat credit denied by the lower authorities is totally incorrect. - Decided in favour of assessee.

Summary

Issues: Denial of Cenvat credit on capital goods due to export for repairs and maintenance.

In this case, the appellant imported capital goods and claimed Cenvat credit on the CVD paid. Subsequently, they found some parts of the capital goods to be defective and exported them for repairs, reversing the Cenvat credit related to those parts. Upon receiving the goods back after repairs and paying duty on the value addition, the appellant sought to claim Cenvat credit on the charges of repairs and maintenance. The Revenue contended that the rules did not apply as the goods were not sent as such for repairs and maintenance, and the invoices used by the appellant were not proper documents for availing Cenvat credit. The lower authorities denied the credit based on these grounds. The appellant argued that since they had reversed the credit on export for repairs, they were entitled to take Cenvat credit upon receiving the goods back. After considering the submissions, the judge noted the admitted facts that the appellant had indeed reversed the credit when exporting the goods for repairs, and subsequently received the goods back after paying duty on the value addition. The judge concluded that the appellant was entitled to claim the Cenvat credit, overturning the decision of the lower authorities. The impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment primarily deals with the denial of Cenvat credit on capital goods by the lower authorities due to the export of defective parts for repairs and maintenance. The key issue was whether the appellant was entitled to claim the Cenvat credit upon receiving the goods back after repairs, despite having reversed the credit at the time of export. The judge analyzed the facts and the relevant rules to determine that the appellant had followed the necessary procedures and was indeed eligible to avail the Cenvat credit. The decision highlights the importance of adhering to the rules and procedures governing the availment of Cenvat credit on capital goods, especially in cases involving exports for repairs and subsequent re-importation.