2017 (2) TMI 527 - AT - Central Excise

Rebate claim - whether deemed credit can be recovered when the benefit of rebate was already recovered? - reliance was placed in the case of Pachmukhi Processors Pvt. Ltd Vs CCE Surat-I - 2010 (258) ELT 152 (Tri-Ahmd) where the appeal of M/s Pachmukhi Processors Pvt. Ltd was allowed observing that since the entire rebate claim has been recovered from the merchant exporter, again denying the deemed CENVAT Credit which was reversed while clearing the processed fabrics to the merchant exporter, would result in recovery of duty twice on the same goods. Held that - The only difference in the present case is, besides export by M/s Aanchal Synthetics Ltd, the Department also proposed to recover deemed credit for clearance made to local buyers. The learned Advocate, considering the fact that the deemed credit of ₹ 4,871/-, being an insignificant amount, agreed to reverse the same to put an end to the litigation. Consequently, the Appellant is directed to reverse the deemed credit amounting to ₹ 4,871/- - In the result, the impugned order is modified to the above extent - appeal allowed in part.

Summary

Issues:
- Appeal against OIA-RKA-41-SRT-I-2009 regarding rebate claim on processed fabrics.
- Recovery of deemed CENVAT Credit on clearance of processed fabrics.
- Comparison with precedent case of Pachmukhi Processors Pvt. Ltd.
- Dispute over deemed credit amount of &8377; 4,871/- for clearance to DTA.

Analysis:
1. The appeal was filed against the order passed by the Commissioner (Appeals) regarding the irregular rebate claim on processed fabrics supplied to a merchant exporter. The Department found discrepancies in the documentation supporting the rebate claim, leading to the recovery of the rebate amount from the exporter. A demand notice was issued to recover deemed CENVAT Credit availed on the clearance of processed fabrics. The appellant relied on a precedent case involving a similar issue to argue for the allowance of their appeal.

2. The Authorized Representative for the Revenue contended that unlike the precedent case, in this instance, a deemed CENVAT Credit of &8377; 4,871/- was also demanded for clearance made to the Domestic Tariff Area (DTA), making it payable. The appellant, in response, agreed to reverse the credit due to the insignificant amount in question.

3. The Tribunal referred to the precedent case of Pachmukhi Processors Pvt. Ltd, which dealt with clearances to the same merchant exporter and deemed credit utilization. The Tribunal noted that recovery of deemed credit from the processors again, after the rebate claim recovery, would amount to double duty recovery on the same goods. However, in the present case, besides export, the Department sought to recover deemed credit for clearances to local buyers as well. Considering the trivial amount of &8377; 4,871/-, the appellant agreed to reverse the credit to resolve the matter, leading to a partial allowance of the appeal.

4. Consequently, the Tribunal modified the impugned order to direct the appellant to reverse the deemed credit amounting to &8377; 4,871/-. The appeal was partly allowed based on the insignificance of the amount in dispute, aligning with the resolution proposed by the appellant's representative.