2017 (5) TMI 757 - AT - Central Excise

CENVAT credit - capital goods - Department felt that they wrongly calculated the duty/payment on the basis of depreciation at the rate of 2.5 percent for each quarter for the entire period instead of 50% depreciation of credit availed in the first year and the balance 50% percent on the credit availed in the subsequent year - Held that - Commissioner in her order has given no reasoning for rejecting the method of depreciation given in Rule (3) (5A) of the CCR, 2004 - the portion of the order pertaining to first demand is completely non-speaking. Besides, the adjudicating authority has given no finding on the significant pleadings made by the appellant - the matter needs to be remanded back to the Commissioner for giving proper findings after carefully examining the contentions of the appellants. Goods destroyed during the testing - non receipt of foreign exchange against Export - RBI Master Circular - demand - Held that - there is no finding given by the adjudicating authority on main contention of the appellant - the matter requires to be remanded back to the Commissioner on this issue also with the direction that the Adjudicating Authority should give findings on all the contentions of the appellants. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Calculation of duty/payment based on depreciation of capital goods for Cenvat Credit availed.
2. Demand raised for export of Motorcycles and Scooters free of cost (FOC) without realization of foreign exchange.

Issue 1: Calculation of duty/payment based on depreciation of capital goods for Cenvat Credit availed:
The appellant, engaged in manufacturing two-wheelers, availed Cenvat Credit on partially used capital goods. The Department alleged that the duty/payment calculation was incorrect, as the appellant applied 2.5% depreciation for each quarter instead of the prescribed 50% depreciation in the first year and the remaining 50% in subsequent years. A demand of ?2,47,824/- was raised for the period 2011-2012 to August 2015, along with interest and penalty proposal. Another demand of ?1,37,817/- was raised for exporting Motorcycles and Scooters free of cost without realizing foreign exchange. The adjudicating authority confirmed both demands and imposed penalties. The appellant contested these demands, citing Rule 3(5)(A)(b) of Cenvat Credit Rules, 2004, arguing that the Commissioner's depreciation criteria deviated from the rules. The Commissioner's order lacked reasoning for rejecting the appellant's depreciation method and failed to address significant pleadings. The matter was remanded back to the Commissioner for proper examination and findings.

Issue 2: Demand raised for export of Motorcycles and Scooters free of cost (FOC) without realization of foreign exchange:
Regarding the demand for exporting Motorcycles and Scooters free of cost without realizing foreign exchange, the appellant argued that the adjudicating authority erred in relying on an RBI Circular, which they claimed was irrelevant. They contended that compliance was met even according to the circular, supported by a destruction certificate from Honda R&D Company, Japan. The appellant referenced Central Excise Rules and notifications to emphasize the absence of foreign exchange conditions, except in specific cases. They further argued that once the RBI waived the foreign exchange condition, the Central Excise Department could not insist on it. The adjudicating authority's findings lacked commentary on the appellant's main contentions, necessitating a remand back to provide detailed findings.

In conclusion, the appellate tribunal set aside the adjudicating authority's order on the mentioned demands and remanded the matter for re-adjudication, emphasizing the need for thorough examination of all contentions and fair opportunity for the appellant to present their case.