2022 (9) TMI 941 - AT - Central Excise

CENVAT Credit - denial of credits - exported of inputs as such - allegation that no manufacturing process had been undertaken - HELD THAT - In the instant case whether the process undertaken by the Appellant will enable it to avail CENVAT Credit is to be determined. Even by going through the alternative plea made by the Appellant, it can very well be said that it was entitle to get CENVAT Credit on those 4 items also. Going by the alternate plea made in the appeal memo at para 3.1 it would make it quite clear that even if inputs are assumed to have been cleared as such, they are duty paid excisable goods which were cleared under bond in terms of Notification issued under Rule 19 which does not provide for reversal of credit of duty paid on such exported excisable goods because legislative intent was to promote export of goods and not export of taxes. This submissions is further strengthen and supplemented with reference to the reliance placed by the Appellant in the relevant case laws on the issue, besides the fact that Section Note - 6 of Chapter XVI of the Central Excise Tariff Act, 1985, that was also referred by the Commissioner (Appeals) in his order but in a different context, clearly reveals that in respect of goods covered under this Section dealing with television image and sound recorders, incomplete or unfurnished goods having essential character of complete or finished article shall also amount to manufacture. The order passed by the Commissioner of Central Tax, Central Excise Service Tax (Appeals), Raigarh to the extent of denial of CENVAT Credits on those 4 items namely copper strips, lights, copper fasteners and paints is hereby set aside - Appeal allowed.

Summary

Issues:
- Denial of CENVAT Credits for exported items not undergoing manufacturing process
- Maintainability of appeal before Single Member Bench
- Interpretation of manufacturing process for availing CENVAT Credits

Analysis:
Issue 1: The Appellant challenged the denial of CENVAT Credits by the Commissioner of Central Tax for 4 items exported without undergoing a manufacturing process. The Commissioner allowed credit for cables but denied it for copper strips, lights, copper fasteners, and paints. The Commissioner held that the process undertaken did not amount to manufacture, and no provision allowed availing CENVAT Credits for exported items without rebate under Rule 18 of the Central Excise Rules, 2004. The order required the Appellant to reverse the CENVAT Credit for the 4 items.

Issue 2: The Authorised Representative argued for the appeal to be heard by a Division Bench due to the interpretation of the manufacturing process's direct relation to the duty rate. However, the Single Member Bench jurisdiction was deemed appropriate as the issue was about determining if the Appellant could avail CENVAT Credit based on the manufacturing process. The Commissioner's failure to provide relief was attributed to the absence of explicit statutory provisions for such credit on exported goods.

Issue 3: The Appellant's Counsel cited precedents supporting the Tribunal's competency in interpreting manufacturing processes and CENVAT Credit availment. Refunds of CENVAT Credit on inputs not utilized for final products were highlighted. Relying on previous judgments, the Appellant's appeal was allowed, setting aside the denial of CENVAT Credits for the 4 items, granting the full credit amount with consequential relief.

In conclusion, the Appellate Tribunal CESTAT MUMBAI allowed the appeal, overturning the denial of CENVAT Credits for the 4 items exported without undergoing a manufacturing process. The Tribunal upheld its jurisdiction to interpret manufacturing processes and CENVAT Credit rules, emphasizing the entitlement of exporters to credit even without an explicit definition of the manufacturer. The judgment provided clarity on the issue, ensuring the Appellant's right to avail CENVAT Credits in line with legal provisions and precedents.