2017 (4) TMI 20 - AT - Central Excise

CENVAT credit - Rubber Stoppers - exported goods re-imported on rejection - credit availed on CVD which was required to be paid at the time of re-import - denial of credit on the ground that the said product being finished goods and does not fall under the category of input or capital goods - whether the Appellants are eligible to CENVAT Credit of the CVD paid on re-import of the manufactured goods initially without payment of duty under bond for export - Held that - As per Rule 16, 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 - The SCN proposed to deny the credit on the ground that it is their finished goods and CCR 2004 does not permit credit on the finished goods. I do not find any substance in the said allegation and confirmation by the authorities below inasmuch as in the Rule itself it is made clear that the goods which were initially cleared on payment of duty on its receipt be considered as input and accordingly the CENVAT Credit would be admissible as it is an input under CCR, 2004 - Appellants are definitely eligible to the credit of the CVD paid on said goods on its re-importation - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is eligible for CENVAT Credit of the CVD paid on re-import of goods initially exported under bond.

Analysis:
The appeal was filed against the order passed by the Commissioner of Central Excise, CUSTOMS (Appeals)- VADODARA-I. The case involved the export and subsequent re-importation of 'Rubber Stoppers' by the appellants. The goods were initially exported under bond but were rejected by the foreign buyer and later re-imported by the appellant. At the time of re-import, the appellant paid CVD and availed CENVAT Credit under Rule 16 of Central Excise Rules 2002. A Show Cause Notice was issued, denying the credit on the grounds that the product was finished goods and not eligible for credit. The demand was confirmed, and a penalty was imposed. The appeal was filed after the rejection of the appeal by the Commissioner (Appeals).

The appellant argued that since the goods were exported under bond and CVD was paid upon re-importation, they were entitled to CENVAT Credit under Rule 16. They contended that after some value addition, the goods were cleared by paying appropriate duty exceeding the credit availed. The appellant cited a judgment of the Tribunal to support their argument.

The Authorized Representative for the Revenue reiterated the findings of the Commissioner (Appeals). The key issue for determination was whether the appellants were eligible for CENVAT Credit on the CVD paid during the re-import of the goods initially exported under bond. The Rule 16 of Central Excise Rules 2002 was examined, which allows credit on goods brought back to the factory for re-making, refining, or any other reason. The rule treats such goods as inputs eligible for CENVAT Credit. The allegation that credit cannot be availed on finished goods was dismissed as the rule considers goods initially cleared on payment of duty as inputs when brought back for re-making or any other reason. Therefore, the appellants were deemed eligible for the credit on the CVD paid during re-importation.

Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per law.