2023 (9) TMI 1060 - AT - Central Excise

CENVAT Credit availed on export goods which were unconditionally exempt - goods cleared to EOUs and SEZS - requirement to pay 6/8% of the value of goods which were cleared to EOUs and SEZS - HELD THAT - This bench, in the case of ASTRIX LABORATORIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, HYDERABAD-I, 2019 (5) TMI 1344 - CESTAT HYDERABAD has held Hon ble High Court of Bombay in the case of REPRO INDIA LTD. VERSUS UNION OF INDIA 2007 (12) TMI 209 - BOMBAY HIGH COURT has held that assessee can remove the exempted goods on furnishing bond and clearance would come under the ambit of Rule 6(6)(v) of CCR 2004 and there is no need to reverse CENVAT Credit. The issue is squarely covered by the above decision of this Bench. The Revenue has not come up with any submission that the facts are different in the present appeals. On going through the records, it is seen that the present appeals are on account of the periodical showcase notices issued to the appellant on the same issue. Appeal allowed.

Summary

Issues involved:
The issues involved in this case are related to the demand for reversal of CENVAT credit by the appellant for exporting goods which were unconditionally exempt and taking credit on both dutiable and exempted goods. The main contention is whether the appellant complied with Rule 6(2) of the CENVAT Credit Rules 2004 and whether the demands made by the department are legally sustainable.

Summary of Judgment:

Issue 1: Compliance with Rule 6(2) of CENVAT Credit Rules 2004
The appellant contended that they maintained separate records for dutiable and exempted goods, ensuring that no CENVAT credit was taken for inputs used in exempted finished goods, as required by Rule 6(2) of CCR 2004. They argued that the demands for reversal of CENVAT credit were erroneous. Citing previous case laws, the appellant demonstrated that no reversal was necessary in such cases. The Tribunal, after examining the submissions and records, found in favor of the appellant, setting aside the demands, interest, and penalties imposed by the adjudicating authority.

Issue 2: Applicability of Rule 6(6)(i) & (ii)
In Appeal No. E/23327/2014, where exempted goods were cleared only to SEZ and 100% EOU, the appellant argued that Rule 6(6)(i) & (ii) explicitly exempted the provisions of sub-rules (1), (2), (3) when goods are cleared to SEZ or 100% EOU. The appellant relied on previous decisions of the Tribunal to support their case. The Tribunal noted that the appellant's case fell within the exemptions provided by Rule 6(6)(i) & (ii), thereby concluding that the confirmed demands were not legally sustainable.

Conclusion:
The Tribunal, after considering the arguments presented by both parties and the relevant legal precedents, ruled in favor of the appellant. Citing established case laws and the appellant's compliance with relevant rules, the Tribunal set aside the demands, interest, and penalties imposed by the lower authorities, providing consequential relief to the appellant. The judgment was pronounced on 22/09/2023 by the bench comprising HON'BLE MR R. MURALIDHAR, MEMBER (JUDICIAL), and HON'BLE MR A. K. JYOTISHI, MEMBER (TECHNICAL).