2017 (8) TMI 308 - AT - Central Excise

Rebate claim - Rule 18 of the CER, 2002 - export of goods - activity of labeling - whether the process undertaken in respect of goods exported on payment of duty amounted to the process of manufacture or not? - Held that - the identical matter has already been decided by this Bench in appellant s own case M/s. Glovis India Pvt. Ltd. Vs. CCE, Chennai-IV 2017 (7) TMI 754 - CESTAT CHENNAI , where it was held that the appellants have been able to successfully establish that such activities have been undertaken by them after purchase of the goods from various vendors till the goods are exported. For these reasons, the activities undertaken by the appellant amounts to manufacture - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the process undertaken by the appellant in respect of goods exported amounts to the process of manufacture under Section 2(f)(iii) of the Central Excise Act, 1944?
- Whether the appellants are entitled to avail CENVAT credit on inputs and input services used in the export of goods?
- Whether the show cause notice issued invoking the extended period is sustainable, considering the issue of limitation?

Analysis:
1. Manufacture Process: The appellants were engaged in the export of motor vehicle parts and claimed rebate under Rule 18 of the Central Excise Rules, 2002. The issue arose when it was questioned whether the process undertaken by them in respect of goods exported amounted to the process of manufacture under Section 2(f)(iii) of the Central Excise Act, 1944. The Tribunal, in a previous decision, held that activities such as packing, labeling, and repacking would amount to the process of manufacture. It was established that the appellants undertook such activities from the purchase of goods till export, satisfying the criteria of deemed manufacture. The Tribunal concluded that the appellants were justified in availing CENVAT credit on inputs and input services used in the export of goods. The impugned order demanding recovery of credit was set aside based on this analysis.

2. CENVAT Credit Entitlement: The Tribunal further addressed the issue of whether the appellants were entitled to avail CENVAT credit on inputs and input services used in the export of goods. It was determined that the appellants had successfully demonstrated that activities like packing and labeling, which they undertook, constituted the process of manufacture. As a result, the Tribunal held that the appellants were indeed liable to avail CENVAT credit on the inputs and input services used in the export of goods. This entitlement was crucial in the overall decision of setting aside the recovery of credit and penalties imposed.

3. Limitation and Show Cause Notice: The Tribunal also considered the issue of limitation in the case. It was noted that the appellants had disclosed the credit availed in their returns and that the goods were exported, making them eligible to claim rebate on inputs and input services. Consequently, the show cause notice issued invoking the extended period was deemed unsustainable. The Tribunal ruled in favor of the appellants on both the merits of the case and the ground of limitation, leading to the setting aside of the impugned order and allowing the appeal with consequential reliefs as per the law.

In conclusion, the judgment by the Appellate Tribunal CESTAT CHENNAI addressed multiple issues concerning the process of manufacture, entitlement to CENVAT credit, and the sustainability of the show cause notice based on limitation. The decision provided detailed analysis and precedent-based reasoning to support the appellants' position, ultimately allowing the appeals and disposing of the stay applications accordingly.