2013 (11) TMI 1421 - AT - Central Excise

Sealent tape exported without payment of duty under bond Clearances were made to SEZ developers - Held that - Following Videocon International Ltd. Vs. CCE, Vadodara-II 2008 (7) TMI 275 - CESTAT, AHMEDABAD - assessee is free to remove inputs or capital goods as such without payment of duty for export under bond Decided in favour of Assessee.

Summary

Issues involved:
1. Availing CENVAT credit on bought-out items and exporting them without reversing the credit availed.
2. Interpretation of Rule 3(5) of CENVAT Credit Rules, 2004.
3. Clearances made to SEZ developers and treatment as exports.

Detailed Analysis:
1. The appellants, manufacturers of aluminium glazing assembly, availed CENVAT credit on sealant tape, a bought-out item, and exported it without reversing the credit availed, which was considered irregular. The credit availed on the sealant tape, not used in manufacturing the final product but exported as such, was the crux of the issue. The Revenue contended that contravening Rule 3(5) of CENVAT Credit Rules led to the initiation of proceedings to recover the wrongly availed credit with interest and propose penalties. The Tribunal examined the case in light of these contentions.

2. The learned advocate argued that the clearances to SEZ developers should be treated as exports, citing a precedent involving Videocon International Ltd. The Tribunal noted that the show-cause notice incorrectly mentioned that the inputs were cleared for export under bond, whereas they were actually cleared to SEZ developers. The Tribunal considered the clearances under bond similar to the Videocon case, where the Tribunal had allowed removal of inputs or capital goods without duty payment for export under bond. The Tribunal emphasized the significance of the circular issued by the Board and the Central Excise Manual, supporting the benefits of such clearances.

3. After considering the submissions from both sides, the Tribunal concurred that the issue was covered by the Tribunal's previous decision in the Videocon case. The learned AR acknowledged that there was no contrary decision favoring the Revenue on the same issue. As the Tribunal found the issue to be already settled by precedent, the appeal was allowed in favor of the appellant with consequential relief, if any. The decision was pronounced at the conclusion of the hearing, granting relief to the appellant based on the established legal principles and precedents.