2008 (4) TMI 98 - AT - Central Excise

Appellant exported the input goods (filter stacks) to the original seller for repairs by reversing the credit originally availed at time of import - Subsequently they filed refund claim for the said amount impugned goods were received back in the factory after repair well within the period of 180 days hence we set aside the impugned orders and send the matter back to the Assistant Commissioner with the direction to allow the refund claim to the appellant appeal of assessee is allowed

Summary

Issues:
1. Rejection of refund claim by Assistant Commissioner.
2. Applicability of Rule 4(5)(a) of Cenvat Credit Rules.
3. Interpretation of provisions regarding export of goods and refund of duty paid.
4. Compliance with Rule 3(4) and Rule 4(5)(a) of Cenvat Credit Rules.
5. Setting aside of impugned orders and direction for refund claim.

Analysis:
1. The appeal was against the rejection of a refund claim by the Assistant Commissioner, upheld by the Commissioner (Appeals). The appellant, a manufacturer of BOPP film, had imported filter stacks and availed modvat credit of CVD. The appellant exported the goods for repairs and filed a refund claim, which was rejected based on the reversal of credit under Rule 3(4) of Cenvat Credit Rules. The Commissioner (Appeals) held that there was no provision for a refund of duty paid on export. The President set aside the impugned orders, citing non-compliance with Rule 4(5)(a) of the Cenvat Credit Rules.

2. The key issue revolved around the interpretation of Rule 4(5)(a) of the Cenvat Credit Rules. The rule allows for the CENVAT credit on inputs or capital goods sent for processing, testing, repair, etc., to be taken back within 180 days. The appellant contended that the goods were sent for repairs, falling under this provision. The Assistant Commissioner rejected this plea, stating that the goods were sent for repairs, not job work. The President disagreed, emphasizing that Rule 4(5)(a) applies to goods sent for repairs, among other purposes.

3. The judgment clarified the distinction between exporting goods and seeking a refund of duty paid. It was highlighted that the appellant exported the goods after paying duty, following proper procedures. The President emphasized that the issue of debiting duty at the time of export and availing credit on CVD paid during re-export are separate matters. There is no provision for a refund of duty paid on export, as per the Commissioner (Appeals).

4. The President noted that while Rule 3(4) requires payment if goods on which credit was taken are removed from the factory, Rule 4(5)(a) allows for credit if goods sent for processing are received back within 180 days. The judgment emphasized the importance of complying with Rule 4(5)(a) in cases where goods are sent for repairs, as in the appellant's situation.

5. Ultimately, the impugned orders of the Assistant Commissioner and Commissioner (Appeals) were set aside, and the matter was directed back to the Assistant Commissioner to allow the refund claim to the appellant in accordance with the rules. The appeal was allowed, providing the appellant with the opportunity to claim the refund as per the provisions of Rule 4(5)(a) of the Cenvat Credit Rules.