2016 (6) TMI 440 - AT - Central Excise

Reversal of cenvat credit taken on the inputs imported and subsequently re-exported - Held that - The goods which are exported do not suffer the duty incidence. Keeping this view in mind, we do not find it appropriate to make a distinction between goods which are exported under ARE-1 procedure on payment of duty under claim for rebate, and those which are exported under bond without payment of duty/reversing the credit under Rule 3(5). Both sets of goods cannot suffer incidence of duty. See Videocon International Ltd. Vs CCE Vadodara-II- 2008 (7) TMI 275 - CESTAT, AHMEDABAD allowing clearance of inputs/capital goods for export without reversal of the credit taken Thus we hold that the appellant-assessee is not required to reverse cenvat credit taken on the inputs which were imported and subsequently re-exported. Accordingly, we allow the appeal filed by the appellant-assessee

Summary

Issues:
1. Appeal against demand for credit involved in imported inputs cleared for export.
2. Challenge to order setting aside refund paid for a subsequent period.

Analysis:
1. The case involved appeals by the appellant-assessee and the Revenue against orders related to the demand for credit on inputs cleared for export. The Commissioner had initially demanded the credit amount, which was subsequently set aside by the Commissioner (Appeals). The Revenue challenged this order, while the appellant-assessee also appealed against the order setting aside the refund for a subsequent period.

2. The appellant-assessee had imported inputs and availed cenvat credit, clearing a portion for export without reversing the credit. The Revenue demanded the credit amount under Rule 3(5) of the Cenvat Credit Rules, which requires payment equal to the credit availed when inputs are removed from the factory. The appellant-assessee argued that CBEC circulars allowed for export under bond without duty payment if credit was taken, supported by Tribunal decisions.

3. The appellant-assessee's counsel cited CBEC circulars from 1996 and 2000, stating that manufacturers could export goods under bond without duty payment if credit was taken. The counsel argued that even if duty was paid before export, it could be rebated if goods were exported under Rule 18. The Revenue contended that Rule 3(5) did not differentiate between domestic and export clearances, requiring credit reversal in both cases.

4. The Tribunal found that the CBEC circulars and the Central Excise Manual allowed for duty-free export of goods on which credit was taken. It held that exported goods should not suffer duty incidence, whether exported under bond or with duty payment for rebate. Citing past decisions, the Tribunal ruled in favor of the appellant-assessee, allowing clearance for export without credit reversal.

5. Relying on precedents like Videocon International Ltd. and Glass and Ceramic Decorators, the Tribunal concluded that the appellant-assessee was not obligated to reverse the cenvat credit on imported inputs cleared for export. The appeal by the appellant-assessee was allowed, and the Revenue's appeal was rejected, providing consequential relief. The cross objection filed by the assessee in the Revenue's appeal was also disposed of.