2015 (10) TMI 1317 - AT - Central Excise

Denial of CENVAT Credit - debit entry in RG 23A Part II - Held that - As there is no dispute that the inputs were excisable and under bond, the appellant procured these goods duty free but manufactured goods had been cleared on payment of duty. In these circumstances, the inputs which have been procured by the appellant duty free, is entitled to take Cenvat credit thereon. In these circumstances, I hold that appellant has correctly taken the Cenvat credit of inputs attributed to export goods cleared in domestic market by way of debit entry in RG 23A Part II register - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
- Availment of Cenvat credit based on debit entry in RG 23A Part II register.

Analysis:
The appellant appealed against the denial of Cenvat credit based on a debit entry in the RG 23A Part II register, which was deemed improper for availing the credit. The appellant, a manufacturer of power cables, had procured duty-free copper rods for an export order. However, when the export order was canceled, they cleared part of the manufactured goods in the domestic market by paying duty. The appellant sought clarification on availing Cenvat credit for the inputs used in the goods cleared domestically. The dispute arose when a show cause notice was issued, questioning the validity of taking Cenvat credit through a debit entry in the register. Adjudication led to the confirmation of demand, interest, and penalties, prompting the appellant to appeal.

The tribunal considered that while the manufactured goods were cleared domestically after duty payment, the inputs were originally procured duty-free. Given this, the tribunal held that the appellant was entitled to Cenvat credit on the inputs used in the goods cleared domestically. The tribunal concluded that the appellant correctly utilized the debit entry in the RG 23A Part II register to claim the credit. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed with any necessary consequential relief. The decision emphasized the appellant's right to claim Cenvat credit on inputs attributed to export goods cleared domestically, despite the method of entry in the register, as long as the eligibility criteria were met.