2024 (6) TMI 183 - AT - Central Excise

Recovery of CENVAT Credit - dropping of proposal for recovery of credit under CENVAT Credit Rules, 2004 on procurement of duty-paid goods for export under advance license scheme of FTP. The adjudicating authority held that credit was not to be denied merely for not having taken recourse to the privilege of using inputs that were not burdened with duties of central excise and that duty paid on clearance of diethylene glycol could be taken as credit under rule 3 of CENVAT Credit Rules, 2004. HELD THAT - That the impugned goods are excisable is not in dispute and yet the reviewing authority avers that these are exempted from duties of central excise and, therefore, bereft of option to pay duty on clearance. Doubtlessly, export promotion schemes in the Foreign Trade Policy (FTP) envisage exemption from duties on procurement and the advance licence/authorization scheme , too, is no exception though such exemption is limited to imported goods only and under Customs Act, 1962. There are no authority that empowers central excise formations to enforce notifications issued under Customs Act, 1962 in furtherance of such schemes. The flexibility afforded to holders of advance licence/authorization for import substitution, with substantially the same exemptions, does not flow from a parallel notification actual or deemed in relation to duties of central excise but from a general facilitation for all exports under schemes or otherwise to detax export price in rule 19 of Central Excise Rules, 2001. The reviewing authority did misconstrue the source of exemption from duties of central excise as a notification to which said proviso is attached for mandatory availment that a notification under rule 19 of Central Excise Rules, 2001 does not. With the twin pillars on which the appeal of Commissioner of Central Excise, Belapur, at the instance of Committee of Chief Commissioners, rested having been broken, the relief sought in this appeal does not have any legal basis. Appeal dismissed.

Summary

Issues involved: Appeal against dropping of proposal for recovery of credit under CENVAT Credit Rules, 2004 on procurement of duty-paid goods for export under advance license scheme of FTP.

Summary:
The Commissioner of Central Excise, Belapur appealed against an order dropping the proposal for recovery of credit under CENVAT Credit Rules, 2004 on procurement of duty-paid goods for export under the advance license scheme of the Foreign Trade Policy (FTP). The adjudicating authority held that credit cannot be denied for not using duty-free inputs and that duty paid on clearance of goods could be taken as credit. The authority also noted that if no CENVAT credit is taken, refund of Terminal Excise Duty paid can be claimed. The reviewing authority directed the Commissioner to appeal, arguing that the issue was not settled due to pending appeals. The respondent contended that the dismissal of appeals made the issue final. The Tribunal found that duty exemption under the advance license scheme did not eliminate the option to pay duty on clearance. The appeal was dismissed as the issue was no longer in dispute after higher courts upheld previous decisions.

In conclusion, the appeal was dismissed as the legal basis for seeking relief was lacking after higher courts upheld previous decisions.