2014 (9) TMI 864 - AT - Central Excise

Availment of CENVAT Credit - Import of machine - Subsequently, the appellant exported this machine under bond without reversal of Cenvat credit taken - Revenue was of the view that the appellant had not put the machinery to use and, therefore, they were not eligible to take the credit - Held that - Capital goods imported by the appellant have been exported. On export of capital goods, the appellant is eligible for rebate of the duty paid thereon under Rule 18 of the Central Excise Rules or the appellant can export the goods without payment of duty under bond under Rule 19 of the said Rules. In respect of the goods on which credit has been taken, Circular issued by Board in 1996 as well as in 2000, clearly says that the manufacturer assessee is entitled to clear the inputs or capital goods for export (on which credit has been taken) under bond without payment of duty. - appellant is not required to reverse Cenvat credit taken on the capital goods, which was procured and subsequently re-exported - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of Cenvat credit on imported capital goods exported without reversal.
2. Interpretation of Rule 3(5) regarding reversal of credit on export clearance.

Analysis:
1. The appellant imported a Glass Printing Machine and availed Cenvat credit but later exported the machine without reversing the credit. The Revenue contended that since the machinery was not put to use, the appellant was not eligible for the credit. The matter went through rounds of litigation, with the lower authorities upholding the demand for credit reversal. The appellant argued citing Circulars by the C.B.E. & C. allowing export under bond without duty payment for goods on which credit was taken. The Tribunal referred to a similar case where it was held that circulars beneficial to the party must be followed. The appellant pleaded for appeal allowance based on this argument.

2. The Revenue argued that Rule 3(5) does not differentiate between domestic and export clearances, requiring credit reversal in both cases. However, the Tribunal noted that the Circulars allowed for export under bond without duty payment for goods on which credit was taken. Referring to a previous case, the Tribunal held that the appellant was not obligated to reverse the Cenvat credit on capital goods exported without reversal. Thus, the appeal was allowed, granting relief in accordance with the law.