2016 (3) TMI 395 - AT - Central Excise

Cenvat credit reversal at the time of clearance of imported and used Capital goods at the time of export against UT-1 Undertaking - Held that - It is observed that Rule 57AB has been repealed and there is no parallel provision contained in the present Cenvat credit Rules, 2001/2002. The contention of the department that a manufacturer can export only the goods manufactured in India under bond without payment of duty is not tanable, in view of the fact that while importation of Capital goods, the Countravalling duty to the extent of Excise duty, as if the goods have been manufactured in India, had already been recovered. In view of the above, find that the Board s Circular No. 345/2/2000-TRU dated 29/8/2000 is applicable in this case and there is no need to reverse the credit already availed. Therefore, there is no merit in the stand of the department. - Decided in favour of assessee

Summary

Issues:
1. Appeal against Order-in-Appeal allowing clearance of imported used Capital Goods under letter of undertaking without duty payment.
2. Interpretation of Rule 6(6) of Cenvat Credit Rules, 2004 regarding clearance of capital goods for export.
3. Applicability of Board Circular No. 345/2/2000-TRU to the case.
4. Export of capital goods under bond as per para 3.4 of Instruction Manual.
5. Reversal of Cenvat credit at the time of clearance of imported capital goods for export.

Analysis:
1. The appeal was filed against the Order-in-Appeal allowing the respondent to clear imported used Capital Goods under a letter of undertaking without payment of duty. The Commissioner (Appeals) set aside the original order, leading to the Revenue's appeal.
2. The Revenue argued that Rule 6(6) of the Cenvat Credit Rules, 2004 permits only excisable goods to be removed for export under bond, excluding capital goods. The Board Circular No. 345/2/2000-TRU was deemed inapplicable due to referencing the old Rule 57AB.
3. The respondent contended that capital goods can be exported under bond as per para 3.4 of the Instruction Manual, even though Rule 57AB was no longer in force. The duty on exported goods is not chargeable, supporting the permissibility of exporting capital goods under bond.
4. The Tribunal analyzed the provisions and found that duty need not be exported with the goods, allowing export under rebate or bond. Para 3.4 of the Instruction Manual explicitly permits the export of inputs or capital goods under bond, similar to the erstwhile Rule 57AB.
5. The Ld. Commissioner (Appeals) correctly determined that the Cenvat credit need not be reversed at the time of clearing imported capital goods for export against a UT-1 Undertaking. The Board's Circular No. 345/2/2000-TRU was deemed applicable, and the appeal of the Revenue was dismissed based on the findings of the Commissioner.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the final decision rendered by the Tribunal, providing a comprehensive understanding of the legal aspects considered in the case.