2006 (7) TMI 56 - AT - Central Excise

Central Excise Cenvat credit Credit taken on inputs used in repair of transformer which is re-exported, credit not to be reversed in view of provisions of Rule 19 of Central Excise Rules, 20002 and Notification No. 43/2001-CE (NT) dt. 26.6.2001

Summary

Issues:

1. Availment of cenvat credit on inputs and capital goods for exported transformer.
2. Re-importation of transformer for repairs on a free of cost basis.
3. Dispute over whether repair amounts to manufacture for cenvat credit reversal.
4. Interpretation of Notification No. 43/2001-CE regarding export goods and input stage rebate.
5. Review of lower authority's order and Commissioner (A)'s decision.

Analysis:

1. The case involved the appellants, manufacturers of transformers, who availed cenvat credit on inputs and capital goods for a transformer exported to Oman, then re-imported for repairs on a free of cost basis. The lower authority ordered cenvat credit reversal, considering the repair activities as not amounting to manufacture. The Commissioner (A) upheld this decision, leading the appellants to appeal to the Tribunal.

2. The Tribunal examined Notification No. 43/2001-CE, which outlines conditions for procuring excisable goods without duty payment for manufacturing or processing export goods. The Tribunal noted that the definition of 'export goods' in Rule 19 of the notification includes excisable and non-excisable goods, allowing input stage rebate on all finished goods, regardless of excisability. The Tribunal highlighted provisions for excise rebate on inputs used in processing export goods, even if the processing does not amount to manufacture.

3. During the proceedings, the JCDR for the Revenue conceded to the appellant's viewpoint. The Tribunal carefully reviewed the case records and found that the cenvat credit availed was for inputs used in repairing the transformers that were re-exported. Considering the provisions highlighted by the appellant's representative, which allow excise rebate on inputs used in processing export goods, the Tribunal concluded that there was no merit in the lower authority's decision to reverse the credit. As a result, the Tribunal allowed the appeal and granted consequential relief, if any.

4. The Tribunal pronounced the operative portion of the order in open court upon the conclusion of the hearing, providing relief to the appellants based on the interpretation of relevant provisions and the purpose of the cenvat credit availed for the exported and repaired transformer.