2015 (11) TMI 824 - AT - Central Excise

CENVAT Credit - Clearance of goods without payment of duty under CT-2 Certificate under cover of invoices to EPG for use in the packing of tubes and tyres - Held that - There is no dispute on the packing material which is eligible for cenvat credit. The only dispute is that respondent has cleared packing material under CT2 certificate to their own EPG for export purposes which is declared as Export Processing Godown having a Customs Bonded Warehouse and the packing material used in the finished goods which are ultimately exported from the bonded warehouse at EPG and also there is no dispute on the export of finished goods which contained packing material from the EPG and the appellant followed procedure under Central Excise Rules and duly followed CT-2 procedure as per notification 43/2007 dt. 26.6.2007. The respondents are eligible for cenvat credit on the packing material. I find that as per sub-rule (5) (vi) of Rule 6 of CCR, the provisions of rule 6 is not applicable as the goods were cleared for export under bond in terms of provisions of CER. Accordingly the respondents are not required to reverse the cenvat credit while clearing under CT-2 certificate to their EPG unit and there is merit in the contention of respondent that LAA has relied his own OIA No.20/07 in the impugned order. I do not find any infirmity in the impugned order which is upheld. - Decided against Revenue.

Summary

Issues:
- Dispute over eligibility of cenvat credit on packing materials cleared to Export Processing Godown (EPG).
- Interpretation of Central Excise Rules and notifications regarding cenvat credit.
- Application of Rule 3(4) of CCR in the context of export clearances.

Analysis:
1. The appeal was filed by Revenue against the order confirming a demand for ineligible cenvat credit on packing materials cleared to EPG. The respondent, engaged in manufacturing truck and tractor tires, exported goods and availed cenvat credit on duty paid for packing materials. The adjudicating authority upheld the demand and imposed penalties, which was appealed by the assessee and allowed by the Commissioner (Appeals), leading to the current appeal by Revenue.

2. Revenue argued that the respondent availed cenvat credit on packing materials cleared to their EPG without following proper procedures, contrary to Rule 3(4) of CCR. The Commissioner (Appeals) based the decision on a previous order, OIA No.20/07, where similar issues were addressed differently. Revenue contended that the packing materials were not used as inputs for final goods, thus challenging the eligibility of cenvat credit.

3. The respondent's advocate supported the Commissioner (Appeals) decision, citing Rule 19 of CER 2002, Rule 3(4) of CCR 2002, and relevant circulars. He argued that the Revenue's new grounds were not valid as they had not appealed the earlier order. The respondent cleared packing materials under CT-2 Form for export to their EPG unit, complying with notification No.43/2007. As per Rule 19(2) of CER and Rule 6(5)(vi) of CCR, goods cleared for export to EPG under bond made the respondent eligible for credit.

4. The Tribunal found no dispute regarding the eligibility of cenvat credit on packing materials. The key issue was the clearance of packing materials to EPG for export purposes under CT2 certificate. The Tribunal determined that the respondent followed proper procedures under Central Excise Rules and notification 43/2007. Since the goods were cleared for export under bond, Rule 6 was not applicable, and the respondent was not required to reverse the cenvat credit. The Tribunal upheld the Commissioner (Appeals) decision, stating that there was no infirmity in the order.

5. In conclusion, the Tribunal rejected Revenue's appeal, affirming the eligibility of the respondent for cenvat credit on packing materials cleared to EPG for export. The cross objection filed by the respondent was disposed of accordingly, with the operative part of the order pronounced in open court on 26.3.2015.