2016 (12) TMI 84 - AT - Central Excise

Demand - Benefit of Notification 203/92 - DEEC licence - availing of input stage credit under Rule 56A or 57A of the erstwhile Central Excise Rules, 1944 - Held that - The benefit of N/N. 203/92 is eligible to a licence holder, subject to conditions therein, and one of the conditions is that the export obligation is discharged and that input stage credit of the inputs consumed is not availed by the exporter. All the licences which were produced by the appellants before the lower authorities, the exporter had discharged the export obligation and the licences were endorsed as transferable by the concerned authorities. The authorities in these appeals have issued a cyclostyled show cause notice to the appellants directing them to produce evidence, that exporter having not availed the cenvat credit on the inputs under the provisions of Rule 56A and/or 57A of the erstwhile Central Excise Rules, 1944. In our considered view, the appellants and importers herein cannot be called upon to produce evidence in respect of an act to be done by exporter and original licence holder. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenging findings of order-in-appeal No. 146, 147 & 148/2006/MCH/JC/EP/06 dated 20.4.2006 regarding availing of DEEC licence and benefit of Notification 203/92.

Analysis:
1. The appeals challenge the findings of the order-in-appeal No. 146, 147 & 148/2006/MCH/JC/EP/06 dated 20.4.2006, raising a common question of law, disposed of by a common order.

2. The appellants procured DEEC licences from original licensees, imported goods claiming benefits under Notification 203/92. The department issued show cause notices to produce evidence that input stage credit was not availed. Adjudicating authority confirmed demands, upheld by the Commissioner (Appeals).

3. Counsel for appellants argued that as transferees of the licence, they need not prove the original license holder did not avail input stage credit, citing precedents like Hico Enterprises case. They relied on decisions supporting the transferee's position regarding export obligations.

4. The departmental representative argued citing precedents that conditions of the notification must be fulfilled before availing benefits. They emphasized the need to ascertain if modvat credit on inputs was availed by the original license holder.

5. Undisputed facts revealed appellants were transferees of DEEC licences, not original holders, and had not fraudulently procured them.

6. The benefit under Notification 203/92 is subject to conditions, including fulfilling export obligations without availing input stage credit. Appellants cannot be asked to provide evidence regarding the actions of the exporter or original license holder.

7. The Tribunal and Supreme Court decisions in cases like Hico Enterprises and Globe Agencies support the appellants' position, holding that the transferee is not liable to prove export obligations for the benefit of Notification 203/92.

8. Considering the above, the impugned order was deemed unsustainable and set aside, with the appeals allowed, granting consequential relief.

This detailed analysis covers the issues raised in the judgment comprehensively, highlighting the arguments presented by both sides and the legal precedents relied upon to reach the final decision.