2014 (2) TMI 590 - AT - Central Excise

Tribunal allows retention of CENVAT Credit on exported machinery without reversal

M/s GLASS AND CERAMIC DECORATORS Versus COMMISSIONER OF CENTRAL EXCISES

The Tribunal ruled in favor of the appellant, allowing for the retention of CENVAT Credit on imported machinery when exported under bond without reversal. ... Reversal of CENVAT Credit - Assessee availed CENVAT Credit in two installments - Assessee imported Glass Printing Machine - Appellant exported this machine in 2006 under bond without reversal of CENVAT Credit taken - Held that:- capital goods imported by the appellant has been exported. On export of capital goods, the appellant is eligible for rebate of the duty paid thereon under Rule 18 of the Central Excise Rules or the appellant can export the goods without payment of duty under bond under Rule 19 of the said Rules. In respect of the goods on which credit has been taken, Circular issued by Board in 1996 as well as in 2000, clearly says that the manufacturer assessee is entitled to clear the inputs or capital goods for export (on which credit has been taken) under bond without payment of duty - appellant has made out a strong case in their favour for grant of stay. Accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Following decision of Videocon International Ltd. [2008 (7) TMI 275 - CESTAT, AHMEDABAD] - Registry is directed to list the appeal for final hearing - Decided in favour of assessee. Issues:1. Eligibility of CENVAT Credit on imported machinery when exported under bond without reversal.2. Interpretation of Rule 3(5) regarding reversal of credit for goods removed as such.3. Consideration of Circulars by CBE&C regarding export of goods under bond without payment of duty.Analysis:1. The appeal concerned the eligibility of CENVAT Credit on imported machinery when exported under bond without reversal. The appellant had imported a Glass Printing Machine and availed CENVAT Credit. Upon exporting the machine without reversing the credit, the Revenue contended that the appellant was not eligible for the credit. The matter had been through multiple rounds of litigation, with the lower authorities upholding the demand for credit reversal. The appellant argued that Circulars by CBE&C allowed for export under bond without duty payment if credit was taken, citing a relevant Tribunal decision in a similar case.2. The interpretation of Rule 3(5) was crucial in determining whether the appellant was required to reverse the credit for goods removed as such. The Revenue argued that Rule 3(5) did not differentiate between domestic and export clearances, maintaining that credit reversal was necessary in both scenarios. However, the Tribunal noted that Circulars issued by the Board explicitly permitted the clearance of goods for export under bond without duty payment if credit had been taken. The Tribunal's decision in a previous case supported this interpretation, emphasizing the entitlement of the manufacturer to clear goods for export without duty payment.3. The consideration of Circulars by CBE&C regarding the export of goods under bond without payment of duty played a significant role in the judgment. The appellant relied on these Circulars to support their case for eligibility of credit retention upon export. The Tribunal found the Circulars, along with the previous Tribunal decision, to be compelling evidence in favor of the appellant. Consequently, the Tribunal granted unconditional waiver from pre-deposit of dues and stayed the recovery during the appeal, scheduling the final hearing based on the precedents and arguments presented.This comprehensive analysis highlights the key legal issues, interpretations of relevant rules and circulars, and the Tribunal's decision in favor of the appellant based on the established legal principles and precedents.