2016 (8) TMI 294 - AT - Central Excise

Cenvat credit - eligibility - duty paid inputs procured indigenously and used in the manufacture of finished goods by the loan licence - export of goods by the principal manufacturer, against DFIA - trade notice issued by the DGFT bearing No.02/AM 07 dt.02.02.2007 - withdrawal of restriction on availing cenvat credit under FTP - whether in the nature of retrospective or prospective - Held that - it is found from the impugned order of the learned Commissioner (Appeals) that at the time of passing of the said order, the retrospective amendment was not available before him. Besides, except referring to the interim Trade Notices issued by DGFT, detailed analysis of relevant facts and the issues raised by the Appellant in their grounds of Appeal had not been addressed by the Ld. Commissioner(Appeals) leading to a cryptic Order. Therefore, in the interest of justice, the case needs to be remanded to the learned Commissioner (Appeals) to consider the arguments on record in detail and also the retrospective amendment to the notification and provisions of Foreign Trade Policy, while deciding the issue afresh on merit. - Appeal allowed by way of remand

Summary

Issues Involved:
1. Admissibility of CENVAT Credit on duty paid inputs for export under DFIA scheme.
2. Interpretation of Para 4.4.7 of Foreign Trade Policy (2004-2009) and Notification No.40/2006-Cus.
3. Retrospective amendments affecting CENVAT Credit eligibility.
4. Adequacy of reasoning in the Commissioner (Appeals) order.

Analysis:

Issue 1: Admissibility of CENVAT Credit on duty paid inputs for export under DFIA scheme:
The Appellant, engaged in manufacturing Inorganic Pigments, sought CENVAT Credit on inputs procured indigenously for manufacturing goods meant for export under the DFIA scheme. The Revenue contended that CENVAT Credit was not available based on specific provisions of the Foreign Trade Policy and Notification No.40/2006-Cus. The central question was whether the Appellant, as a loan licensee, could rightfully avail CENVAT Credit on such inputs.

Issue 2: Interpretation of Para 4.4.7 of Foreign Trade Policy (2004-2009) and Notification No.40/2006-Cus:
The Appellant argued that the restrictions in Para 4.4.7 of the Foreign Trade Policy and Condition (v) of the notification were no longer applicable due to retrospective amendments. They contended that the earlier restrictions had been amended, making them eligible for CENVAT Credit. The Commissioner (Appeals) was criticized for not addressing these critical legal amendments and for providing a seemingly inadequate reasoning in the order.

Issue 3: Retrospective amendments affecting CENVAT Credit eligibility:
The retrospective amendments introduced by the Finance Act and changes in the Foreign Trade Policy were pivotal in determining the Appellant's eligibility for CENVAT Credit. The lack of consideration of these amendments by the lower authorities raised concerns about the fairness of the decision-making process and necessitated a detailed review in light of the updated legal framework.

Issue 4: Adequacy of reasoning in the Commissioner (Appeals) order:
The Appellant challenged the Commissioner (Appeals) order, highlighting its lack of reasoning and failure to address crucial arguments raised by the Appellant regarding the applicability of CENVAT Credit rules. The need for a thorough analysis of the facts, legal provisions, and retrospective amendments was emphasized for a just and informed decision.

In conclusion, the Tribunal allowed the appeal by remanding the case to the Commissioner (Appeals) for a detailed reconsideration in light of the retrospective amendments and all relevant arguments put forth by the parties. The need for a comprehensive review to ensure justice and adherence to the updated legal provisions was underscored. Additionally, a miscellaneous application for a change in the cause title of the appeal was granted, reflecting procedural fairness in the proceedings.