2021 (2) TMI 953 - AT - Central Excise

CENVAT Credit - duty paid on re-exportation of the capital goods - denial of Cenvat credit on the ground that as per Rule 3(5A) there is no provision to clear the capital goods without payment of duty for export - HELD THAT - Though there is no mention about export of capital goods in rule 3(5A) but in general any export of goods does not attract duty as the export goods can be cleared either under bond or under claim for rebate. The appellant has relied upon the various judgment wherein the issue of payment of duty in terms of Rule 3(5A) has been dealt with in respect of export goods. However both the lower authority have not dealt this situation in detail, after considering the relevant judgment on the issue. The appellant also vehemently argued that even if Cenvat credit is not available, since the goods have been exported the appellant are entitled for rebate claim. It is found that this is a vital issue raised by the appellant before the Adjudicating authority as well as the Commissioner (Appeals) .The same should have been considered in detail and proper finding should have been given however, both the authorities failed to properly consider the issue of rebate claim in accordance with law. Both the authorities have not considered the overall issue on the basis of the legal provision and also on the various judgments based on this issue therefore, in the interest of justice the only option left for us is to remit the matter back to the Adjudicating Authority for considering all the issues and pass a reasoned order - Appeal allowed by way of remand.

Issues involved:
1. Availment of Cenvat Credit on custom duty paid for re-exported capital goods under EPCG scheme.
2. Denial of Cenvat credit based on Rule 3(5A) of the Cenvat Credit Rules, 2004.
3. Eligibility for rebate claim on exported goods.
4. Failure of lower authorities to consider legal provisions and judgments on the issues.

Analysis:

Issue 1: Availment of Cenvat Credit
The appellant imported capital goods under the duty-free EPCG scheme in 2011, re-exported them after use, and paid custom duty of &8377;1,96,33,568. Subsequently, the appellant availed Cenvat Credit for the custom duty paid. However, during an audit, it was discovered that the duty paid was against pending dues, not for the purpose of payment of custom duty. The appellant agreed with the audit objection, reversed the credit, but later claimed to have made the payment "under protest." The appellant argued for re-credit based on Rule 3(5A) of the Cenvat Credit Rules, 2004, claiming eligibility for depreciation. The authorities denied re-credit due to failure to fulfill EPCG obligations and the ineligibility of the custom duty and cess for credit under the rules.

Issue 2: Denial of Cenvat Credit based on Rule 3(5A)
The lower authorities denied Cenvat credit citing Rule 3(5A), stating no provision to clear capital goods without duty payment for export. However, the appellate tribunal noted that while Rule 3(5A) did not mention export of capital goods, generally, export goods do not attract duty and can be cleared under bond or for rebate. The appellant cited judgments on payment of duty under Rule 3(5A) for export goods, which the lower authorities did not adequately address. The tribunal found that the authorities failed to consider the issue of rebate claim in detail, which was a crucial point raised by the appellant.

Issue 3: Eligibility for Rebate Claim
The appellant contended that even if Cenvat credit was not available, they were entitled to a rebate claim since the goods were exported. The tribunal observed that this issue was vital and should have been properly considered by the adjudicating authority and the Commissioner (Appeals). Both authorities failed to provide a thorough analysis of the rebate claim issue in line with legal requirements and relevant judgments.

Issue 4: Failure to Consider Legal Provisions and Judgments
The appellate tribunal found that the lower authorities did not adequately consider the legal provisions and judgments related to the issues at hand. Due to this failure, the tribunal decided to remit the matter back to the adjudicating authority for a comprehensive review, ensuring the appellant's opportunity for submission and personal hearing. The impugned order was set aside, and the appeal was allowed by remanding the case for de novo adjudication within three months.

In conclusion, the appellate tribunal's judgment highlighted the importance of a detailed consideration of legal provisions, judgments, and issues related to Cenvat credit, export duty payments, and rebate claims. The decision to remand the case for a fresh adjudication aimed at ensuring justice and proper examination of all relevant aspects of the case.

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