CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
O-20, New Mental Hospital Compound, Meghani Nagar,
West Zonal Bench, Ahmedabad 380 014
Appeal No. : E/11887/2013
Arising out of OIA-PJ/600/VDR-I/2012-13 dt 21/03/2013 passed by the Commissioner of Central Excise, CUSTOMS (Appeals)- VADODARA-I
M/s Universal Medicap Ltd
Commissioner of Central Excise,
CUSTOMS (Appeals)- VADODARA-I
For Applicant(s) : Shri Dhaval Shah, Advocate
For Respondent(s) : Shri L Patra, Authorised Representative
Dr D.M. Misra, Hon'ble Member (Judicial)
Date of Hearing / Decision : 10/3/2017
ORDER NO. A/10614 / 2017
Per: Dr. D.M. Misra
This appeal is filed against OIA-PJ/600/VDR-I/2012-13 dt 21/03/2013 passed by the Commissioner of Central Excise, CUSTOMS (Appeals)- VADODARA-I.
2. Briefly stated the facts of the case are that the Appellants had initially exported Rubber Stoppers manufactured by them under bond which was rejected by their foreign buyer accordingly, later re-imported by the appellant vide Bill of Entry dtd 4.10.2005. At the time of re-import of the goods, the Appellant was required to pay the CVD of Rs 1,94,031.91 on which they availed CENVAT Credit under Rule 16 of Central Excise Rules 2002. A Show Cause Notice was issued to them on 12.02.2009 for denial of credit on the ground that the said product being finished goods and does not fall under the category of input or capital goods and accordingly CENVAT Credit is not admissible on the same. On adjudication, the demand was confirmed and penalty imposed. Aggrieved by the said order, the Appellants filed appeal before the learned Commissioner (Appeals), who in turn, rejected their appeal. Hence, the present appeal.
3. The learned Advocate for the Appellant submits that since the goods were exported under bond (without payment of duty), on its rejection by the foreign buyer, the CVD was paid at the time of re-importation and accordingly the CENVAT Credit on the CVD amount was availed in accordance with the Rule 16 of Central Excise Rules 2002. He submits that after making some value addition, they cleared the goods on payment of appropriate duty which is more than the credit availed. It is his contention that the CENVAT Credit on receipt of the goods is admissible to them under Rule 16 of Central Excise Rules 2002 and in support, he has referred to the judgment of the Tribunal in the case of Liugong India Pvt. Ltd Vs CCE Bhopal 2016 (342) ELT 412 (Tri-Del).
4. The learned Authorized Representative for the Revenue reiterates the findings of the learned Commissioner (Appeals).
5. I find that the short issue involved in the present case for determination is whether the Appellants are eligible to CENVAT Credit of the CVD paid on re-import of the manufactured goods initially without payment of duty under bond for export. It is not in dispute that the goods were exported and due to rejection by the foreign buyer, later returned and at the time of re-import, the CVD was required to be paid. The Rule 16 of Central Excise Rules 2002 reads as under:-
Rule 16- Credit of duty on goods brought to the factory:
(1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT Credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules 2002 and utilize this credit according to the said rules.
(2) If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT Credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of section 3 or section 4 or section 4A of the Act, as the case may be.
(Explanation: The amount paid under this sub-rule shall be
allowed as CENVAT Credit as if it was a duty paid by the manufacturer who removes the goods.]
(3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Commissioner.
6. On a plain reading of the said Rule, I find that the goods which were cleared and brought back to the factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall be eligible to take credit as if the such goods are received as input under CENVAT Credit Rules 2004. The Show Cause Notice proposed to deny the credit on the ground that it is their finished goods and CENVAT Credit Rules 2004 does not permit credit on the finished goods. I do not find any substance in the said allegation and confirmation by the authorities below inasmuch as in the Rule itself it is made clear that the goods which were initially cleared on payment of duty on its receipt be considered as input and accordingly the CENVAT Credit would be admissible as it is an input under CENVAT Credit Rules, 2004. Thus, a fiction has been created to consider the finished goods cleared initially, when returned to the factory for being remade, refined and reconditioned etc or for any other reason as an input. In the present case, the situation is covered under the expression for any other reason, hence, the Appellants are definitely eligible to the credit of the CVD paid on said goods on its re-importation.
7. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.
(Dictated and pronounced in the open Court)