2018 (3) TMI 1107 - AT - Central Excise

CENVAT credit - goods were directly sent to the CHA and subsequently CENVAT credit was availed without receipt of the input in the factory - Held that - the input on which CENVAT credit was availed by the appellant have been admittedly exported under bond/letter of undertaking, CENVAT credit rules provides CENVAT credit in respect of inputs removed under bond. Merely because inputs have not been received in the factory CENVAT credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat credit due to input not received in the factory.
2. Admissibility of Cenvat credit for exported goods under bond/undertaking.

Analysis:

Issue 1: Denial of Cenvat credit due to input not received in the factory
The appellant, engaged in manufacturing excisable goods, had purchased inputs where the vendor issued an invoice showing the appellant as the buyer and a Clearing and Handling Agent (CHA) as the consignee. The goods were directly sent to the CHA, and Cenvat credit was availed without the input physically reaching the factory. The Adjudicating authority denied the credit, a decision upheld by the Commissioner(Appeals). The appellant contended that since the goods were exported under bond/undertaking, Cenvat credit should be allowed. The appellant cited various judgments supporting their claim, emphasizing that the export of goods should not attract duty, hence credit should be granted.

Issue 2: Admissibility of Cenvat credit for exported goods under bond/undertaking
The Revenue, represented by the Superintendent (A.R.), argued that the appellant failed to follow the prescribed procedure under the Cenvat Credit Rules, leading to the denial of credit. The Revenue relied on judgments highlighting the importance of compliance with rules for extending Cenvat credit. However, upon review of submissions and records, the Member (Judicial) found that the denial of Cenvat credit was solely based on the input not reaching the factory, despite the inputs being exported under bond. The Member noted that the ownership of the input remained with the appellant, and the goods were exported without duty implication. Citing precedents, including Air Pac Filters & Systems Pvt. Ltd., Indian Oil Corporation Ltd, Emkay Industries, Glass and Ceramic Decorators, and Ford India Pvt. Ltd., the Member concluded that Cenvat credit for exported goods under bond/undertaking is admissible, even if the inputs did not physically enter the factory premises. The judgment highlighted the settled legal position that duty should not be exported when goods are exported, thus allowing the appeal.

In conclusion, the appellate tribunal allowed the appeal, emphasizing the admissibility of Cenvat credit for exported goods under bond/undertaking, despite the inputs not physically reaching the factory premises. The judgment underscored the importance of ownership and export under bond in determining the eligibility for Cenvat credit, aligning with established legal precedents and principles governing excise duty on exported goods.