9911796707
TMI Blog2014 (8) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 8,58,235/- at that time, with interest. However, the petitioner did not reverse the CENVAT credit amount in 2009, but instead only paid the CENVAT credit amount after it received the Show Cause Notice of 1.5.2012. Regardless of the petitioner's possible entitlement to a drawback, it did not reverse the CENVAT credit in 2009 despite its awareness that it had wrongly availed of the same in 2007, and thus acted contrary to Rule 3(5) of the CENVAT Credit Rules. This Court thus need not labour to discern that the petitioner had willfully retained the CENVAT credit from November 2009, when its wrongful utilization was brought to its notice, all the way up to May 2012. During this period, this credit could have in all probability been used by the petitioner for whatever purposes necessary, as all availed credit accumulates in the CENVAT credit account, which is a common account used to pay service tax, central excise duty etc. Such wrongful utilisation of CENVAT credit amounts to a loss to the Revenue, as tax owed to the Revenue is in effect being withheld. However, while awaiting the decision on time relaxation, the petitioner continued to profit from the wrongly utilized CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,093/- comprising of 50% excluding Additional Customs Duty Import, (i.e. Basic Excise Duty ₹ 3,24,362/- + Ed. Cess ₹ 6,487/- + S H Cess ₹ 3,244/-) for financial year 2007-08 in entry No. 1, in CENVAT credit register dated 31.05.2007, and b. ₹ 5,24,143/-, comprising of remaining 50% (i.e. ₹ 3,34,093/-) + 100% Additional Customs Duty of Import of ₹ 1,90,050/-, on 30.7.2007, in entry no. 11 3. Re-export of the equipment was carried out on 12.8.2007 within 3 months from date of import. After this, the petitioner approached the Office of the Commissioner of Customs (Export) ( CC(E) ) by application of 25.9.2007 claiming drawback of basic customs duty only, and not of the Central Excise duties. The claim was settled to the extent of 93.67% of the basic customs duty paid and payment was accordingly received. 4. However, during an internal audit by the Central Excise Commissionerate for the period 2007-08 and 2008-09, the audit team noted that the petitioner had wrongly availed of CENVAT credit of the Excise duty, contrary to Rule 3(5) of the CENVAT Credit Rules, 2004, as the goods were temporarily imported capital goods, meant to be re-exported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report be sent. The CC(E) wrote back on 5.7.2011 asking the petitioner to forward a copy of the original letter dated 26.10.2009 in order to enable them to prepare the report and send it to the Ministry. The petitioner responded by its letter of 23.7.2011 accordingly. 8. In the meantime, a show cause notice dated 1.5.2012 ( the 2012 Show Cause Notice) was received from the Department of Central Excise, on the wrongful utilization of CENVAT credit, and the petitioner paid the entire demand of ₹ 16,63,308/-. 9. Having received no responses to its representations, the petitioner sent a representation dated 1.2.2013 requesting decision in this matter, but received no response. Consequently, the petitioner filed a writ petition before this Court seeking a direction to the respondent to relax the time period under rule 7A of the Re-export Rules. The Court by its order of 12.8.2013 directed the respondent to decide the application. A personal hearing was held on 3.10.2013 and the petitioner was queried whether the export was made under bond procedure and whether the adjudicating order on wrong utilization of CENVAT credit amount had been appealed or not. The petitioner by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CENVAT credit of the excise duty on the re-exported goods. The petitioner fourthly urges that the respondent is also wrong in its assumption that the utilization of balance credit on 30.7.2007 (when the good was removed from the factory) was with the knowledge that full CENVAT credit on capital goods is allowed in the same financial year if the goods are cleared in the same financial year. 12. The petitioner admits its liability to pay the entire duty along with interest on this capital machinery. The petitioner also admits to the fact that its utilization of CENVAT credit was wrongful. It states that Central Excise duties paid on import were treated as capable of CENVAT credit, like other cenvatable products , without going into the details of the excise rules and procedures, and consequently, full CENVAT credit of the central excise duty was availed. The petitioner has been seeking a relaxation of the time period to claim duty drawback since 2009, by when the time period for claim of duty drawback had already expired. However, the time relaxation was not allowed and the petitioner has consequently, suffered a double tax, being unable to claim a drawback of duty. 13. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h exporter or agent, and for reasons to be recorded in writing, exempt such exporter or agent from the provisions of such rule and allow drawback in respect of such goods. 17. The essence of this dispute is that the petitioner wrongly availed of CENVAT credit in 2007, which came to its notice after the audit by the Excise Commissionerate as early as 2009. The petitioner contends that it has suffered a double tax by virtue of having paid duty at the time of import in 2007, and then having complied with the CENVAT demand along with penalty and interest in 2012, to make good its wrongful utilization of CENVAT credit. Aggrieved, it seeks to claim a duty drawback by challenging the impugned order denying it a time relaxation under Rule 7A. 18. It is pertinent to note the respondent informed the petitioner by way of the letter as early as on 6.8.2009 that the audit revealed that CENVAT credit had been wrongly availed of, a fact which the petitioner admits in the writ petition. Furthermore, the 2012 Show Cause Notice refers to a show-cause notice sent as far back in time as 13.11.2009 (Annexure F of the Show Cause Notice of 1.5.2012) asking for an explanation for the non-reversal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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