2015 (10) TMI 2189 - AT - Central Excise

CENVAT Credit - capital goods - later on re-exported the said capital goods and got their EPCG licence cancelled - Held that - appellant is not required to reverse CENVAT Credit taken on the capital goods, which was procured and subsequently re-exported - In view of the consistent stand of Tribunal 2014 (9) TMI 864 - CESTAT MUMBAI , which is also in accordance with the Board Circular dated 29.08.2000 - Decided against Revenue.

Summary

Issues:
1. Whether the appellant is required to pay duty equal to the amount of Cenvat Credit taken at the time of import for capital goods re-exported under EPCG scheme.
2. Whether the appellant is required to reverse the Cenvat Credit taken on capital goods that were imported and subsequently re-exported without payment of duty.

Analysis:
Issue 1:
The appellant imported capital goods under the EPCG scheme and cleared them by paying CVD. Subsequently, they found the goods produced were unsatisfactory, re-exported the capital goods, and canceled their EPCG license. The Revenue contended that the appellant must pay duty equal to the Cenvat Credit taken at the time of import. The Commissioner, following a board circular, allowed the appeal. The Revenue appealed against this order.

Issue 2:
The Revenue argued that since the goods were removed as such without payment of duty, the appellant should reverse the Cenvat Credit taken at the time of import. The appellant referenced a board circular and previous tribunal decisions supporting the export of capital goods without reversing the Cenvat Credit. The tribunal noted the circular's provision allowing export under bond without payment of duty and cited previous decisions where the tribunal held that the appellant was not required to reverse Cenvat Credit on exported capital goods.

The tribunal, based on previous decisions and the board circular, held that the appellant was not obligated to reverse the Cenvat Credit taken on the capital goods that were imported and subsequently re-exported. The appeal filed by the Revenue was dismissed, and the cross objection by the respondent was disposed of accordingly.