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2017 (3) TMI 769 - AT - Central ExciseCENVAT credit - Block Making Machine - denial of credit on CVD on the ground that the said machine is the final product and does not fall under the category of input or capital goods - whether the Appellants are eligible for CENVAT Credit of CVD paid on the manufactured goods cleared initially without payment of duty under bond for export? - the goods were exported for exhibition purpose and later returned, at the time of re-import, the CVD was required to be paid or not? - Held that - As per Rule 16 of CER, 2002, the goods which were cleared and brought back to the factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall be eligible to take credit as if the such goods are received as input under CENVAT Credit Rules 2004 - a fiction has been created to consider the finished goods cleared initially, when returned to the factory for being remade, refined and reconditioned etc or for any other reason as an input - In the present case, the situation is covered under the expression or for any other reason , hence, the Appellants are definitely eligible to the credit of the CVD paid on said goods on its re-importation - credit allowed - appeal allowed - decided in favor of appellant.
Issues:
- Eligibility for CENVAT Credit of CVD paid on goods initially cleared under bond for export. Analysis: The appeal in this case was filed against an order passed by the Commissioner (Appeals) regarding the denial of CENVAT Credit on a Block Making Machine initially exported for exhibition purposes and later re-imported into India. The Appellants were required to pay CVD on re-import, which they availed as CENVAT Credit under Rule 16 of Central Excise Rules 2002. The dispute centered around whether the Appellants were entitled to this credit since the machine was considered a final product and not an input or capital good. The Appellant argued that the CENVAT Credit was admissible under Rule 16, citing a previous Tribunal judgment. The Revenue supported the findings of the Commissioner (Appeals) in denying the credit. The key issue for determination was whether the Appellants were eligible for CENVAT Credit of CVD paid on the goods initially cleared under bond for export. The Tribunal analyzed Rule 16 of the Central Excise Rules 2002, which allows credit on goods brought back to the factory for re-making, refining, or re-conditioning. The Rule treats such goods as inputs for the purpose of availing CENVAT Credit. The Show Cause Notice had argued that since the goods were finished products, they did not qualify for credit. However, the Tribunal disagreed, noting that the Rule explicitly considers goods cleared initially as inputs when brought back for various reasons, including "for any other reason." This provision created a fiction where finished goods could be treated as inputs upon re-importation for further processing. As the situation in this case fell under the provision "for any other reason," the Appellants were deemed eligible for the CENVAT Credit on the CVD paid during re-importation. In conclusion, the Tribunal set aside the impugned order and allowed the appeal, granting any consequential relief as per the law. The judgment clarified the applicability of Rule 16 in allowing CENVAT Credit on goods initially cleared under bond for export and later re-imported for further processing, even if they were considered finished products.
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