2008 (7) TMI 275 - AT - Central Excise

Funnel machineries exported without payment of duty under bond appellant cited Board s letter No. 345/2/2000-TRU, dated 29-8-2000, which permits clearance of capital goods for export under bond - conclusion of the Commissioner (Appeals) that only excisable goods can be cleared for export under bond as per Rule 19 of Central Excise Rules and therefore the Board s letter cannot be applied is not correct held that, there is no legal bar for exporting such capital goods under a bond

Summary

Issues:
Appeal against demand of duty and penalty under Central Excise Act, 1944 for exporting capital goods without payment of duty under bond.

Analysis:
The appeal was filed against an order confirming a demand of Rs. 10,72,649.64 under Section 11A of Central Excise Act, 1944 and imposing a penalty of Rs. 25,000 under Rule 13(1) of CENVAT Credit Rules, 2002 for exporting "Funnel" machineries without paying duty under bond. The demand was based on Rule 3(4) of CENVAT Credit Rules, which requires payment equal to the credit availed when capital goods are removed from the factory. The Revenue argued that the rule does not differentiate between removal for home consumption or export.

The appellant's advocate argued that the law allows for goods to be exported under bond without duty payment, citing a Board's letter permitting clearance of capital goods for export under bond. He contended that the Commissioner (Appeals) incorrectly interpreted Rule 19 of Central Excise Rules, stating that only excisable goods can be exported under bond. The advocate emphasized that there is no legal restriction on exporting capital goods under bond and that the order exceeded the show cause notice. The definition of excisable goods was also debated, asserting that it includes goods subject to excise duty without specifying they must be manufactured in India.

The Tribunal considered the arguments and the order-in-appeal. Referring to the Board's letter and the Central Excise Manual, it concluded that the Commissioner (Appeals) erred in not following the circular allowing export of capital goods under bond. Citing the Supreme Court judgment in Collector v. Dhiren Chemical Inds. Ltd., the Tribunal emphasized giving effect to beneficial circulars. The Central Excise Manual explicitly stated that manufacturers can export inputs or capital goods under bond. Therefore, the Tribunal allowed the appeal, providing consequential relief to the appellants.

This judgment highlights the importance of following beneficial circulars and manuals in interpreting excise rules, especially regarding the export of capital goods under bond without payment of duty. The decision underscores the need to consider such guidelines in excise matters to ensure fair treatment and adherence to established legal principles.