2004 (5) TMI 415 - AT - Central Excise

Appeal Granted: Credit denial overturned, penalty unjustified, conditions unsupported by scheme provisions.

HEMANI INTERMEDIATES PVT. LTD. Versus COMMISSIONER OF CUS. & C. EX., SURAT-II

HEMANI INTERMEDIATES PVT. LTD. Versus COMMISSIONER OF CUS. & C. EX., SURAT-II - 2004 (172) E.L.T. 48 (Tri. - Mumbai) Issues:1. Denial of credit of CVD paid on reimported goods2. Imposition of penalty under Rule 57-I3. Failure to file a declaration under Rule 57G before taking creditAnalysis:Issue 1: Denial of credit of CVD paid on reimported goodsThe appellant exported Chloro Benzene Compound, which was rejected by the foreign buyer. Permission was granted to reimport the consignment for reprocessing with the condition not to take credit of CVD paid. The appellant imported the goods, paid CVD, took credit in RG 23A Pt. II, reprocessed, and cleared them. The Department denied the credit citing the condition and failure to file a Rule 57G declaration. The appellant argued that the denial was unjustified as the scheme allows credit availment, and the conditions imposed were not supported by relevant rules. The Tribunal found the denial baseless and allowed the credit taken.Issue 2: Imposition of penalty under Rule 57-IThe Commissioner upheld the denial of credit and imposed a penalty under Rule 57-I. The appellant contended that no duty evasion was intended, and penalties were unwarranted. The Tribunal noted that no suppression occurred, and the penalty was unjustified. The imposition of penalty was deemed inappropriate as the appellant acted in accordance with the scheme's provisions.Issue 3: Failure to file a declaration under Rule 57G before taking creditThe Department argued that the appellant's failure to file a Rule 57G declaration justified credit denial. However, the Tribunal found this argument insufficient as the Department was aware of the reimport for reprocessing, and the non-filing was used as an excuse to deny admissible credit. The Tribunal concluded that the denial based on the non-filing of the declaration was unjustified.In the final decision, the Tribunal allowed the appeal, setting aside the Commissioner's order. The Tribunal found the denial of credit unwarranted, the penalty unjustified, and the conditions imposed during reimport not supported by the scheme's provisions. The appellant's actions were deemed compliant with the applicable rules, leading to the reversal of the Commissioner's decision.