2016 (11) TMI 923 - AT - Central Excise

Refund claim - reversal of CENVAT credit wrongly - exported goods received for repairs, during the repair, certain goods were used on which excise duty was paid. The appellant had taken credit of those goods. The said credit was however reversed when the transformers were re-exported after repairs - Is refund claim justified? - Held that - I find that co-ordinate Bench of this Tribunal in the case of Transformers & Electricals 2006 (7) TMI 441 - CESTAT, BANGALORE has in exactly similar circumstances allowed the credit. I also find that the Commissioner in the appellant s own case for the subsequent period has allowed the credit of such inputs. Further, in view of the Circular No.283/117/96-CX dated 31/12/1996 it is apparent that the credit on such inputs would be admissible - credit allowed - refund claim justified - appeal allowed - decided in favor of appellant.

Summary

Issues: Admissibility of Cenvat credit on material used for repairs in respect of materials to be re-exported.

Analysis:
The appellants, engaged in manufacturing transformers, exported transformers that were later returned for repairs and subsequently re-exported. During the repair process, excise duty was paid on certain goods used, and the appellants claimed credit for these goods. However, when the transformers were re-exported after repairs, the credited amount was reversed. The appellants believed this reversal was incorrect and filed a refund claim. The original adjudicating authority sanctioned the refund, but the Commissioner (Appeals) set aside this decision. The principal issue revolved around the admissibility of Cenvat credit on materials used for repairs in the context of materials intended for re-export.

The learned Counsel referred to Circular No.283/117/96-CX, highlighting Rule 57F(1)(ii) allowing removal of inputs for export under bond. The circular clarified that clearance of inputs for export under bond could be treated as 'final product,' enabling utilization of credit as per Rule 57F(4). Additionally, the Board's notification outlined conditions for duty-free procurement of excisable goods for manufacturing export goods. The notification emphasized that the benefit of input rebate could be claimed on all finished goods, whether excisable or not, and included materials used for processing not amounting to manufacture. The Counsel also cited a previous order-in-original and a Tribunal decision where credit for inputs used in repairing goods for re-export was allowed under similar circumstances.

Upon reviewing the submissions, the Tribunal noted that a previous decision and the Commissioner's ruling in the appellant's subsequent case allowed the credit for such inputs. Considering the circular referenced by the Counsel, the Tribunal concluded that the credit on the inputs used for repairs was admissible. Therefore, the appeal was allowed, emphasizing consistency with a prior Tribunal decision and the Commissioner's decision in the appellant's subsequent case. The judgment was pronounced on 23-03-2016.