2017 (3) TMI 1004 - AT - Central Excise

Appeal Granted: CENVAT Credit Allowed on Re-imported Goods

The Tribunal allowed the appeal, setting aside the order denying CENVAT Credit on goods re-imported after initial export for exhibition purposes. The ... CENVAT Credit - Credit of duty on goods brought to the factory - treatment of returned goods as inputs - remade, refined, re-conditioned or for any other reason - fiction of treating finished goods as inputsCENVAT Credit - Credit of duty on goods brought to the factory - treatment of returned goods as inputs - Entitlement to CENVAT credit of CVD paid on goods re-imported after export under bond for exhibition, where the goods were subsequently brought to the factory - HELD THAT: - The Tribunal held that Rule 16 of the Central Excise Rules, 2002 creates a statutory fiction by providing that goods brought to the factory for being re-made, refined, re-conditioned or for any other reason shall be treated as received as inputs for the purpose of taking CENVAT credit. On a plain reading of the Rule, goods returned to the factory on re-importation fall within the scope of being received as inputs and the assessee is entitled to take credit of duty paid on such receipt as if they were inputs under the CENVAT Credit Rules. The denial of credit on the ground that the goods were finished goods is unsustainable because the Rule expressly covers returned goods by treating them as inputs, including under the save-all phrase 'or for any other reason.' Applying that determinative legal principle to the facts, the appellants were entitled to claim CENVAT credit of the CVD paid on re-importation of the machine. [Paras 6]Claim for CENVAT credit of the CVD paid on re-imported goods upheld; impugned order set aside and appeal allowed with consequential relief as per law.Final Conclusion: The appeal succeeds: Rule 16 entitles the assessee to take CENVAT credit on duty paid on goods brought back to the factory on re-importation by treating such goods as inputs; the appellate order denying credit is set aside and the appeal is allowed with consequential relief. Issues:- Eligibility for CENVAT Credit on goods re-imported after initial export for exhibition purposes.Analysis:The appeal was filed against an order passed by the Commissioner (Appeals) regarding the denial of CENVAT Credit on goods re-imported after being initially exported for exhibition purposes. The Appellants exported Standup and Zipped Pouch making Machine under bond for exhibition, later re-imported the goods, paid CVD, and availed CENVAT Credit under Rule 16 of Central Excise Rules 2002. A Show Cause Notice was issued, denying credit on the grounds that the machine was a final product and not eligible for credit. The demand was confirmed, and a penalty was imposed. The Appellants contended that CENVAT Credit was admissible under Rule 16, citing a Tribunal judgment. The Revenue upheld the Commissioner's findings.The key issue for determination was the eligibility of the Appellants for CENVAT Credit on the CVD paid for goods initially cleared without duty for export. Rule 16 of Central Excise Rules 2002 allows credit on goods brought back to the factory for re-making, refining, or other reasons. The Rule treats such goods as inputs for credit purposes. The Show Cause Notice argued against credit for finished goods, but the Tribunal found no merit in this argument. The Rule explicitly considers initially cleared goods, upon re-importation for any reason, as inputs eligible for CENVAT Credit. The Tribunal concluded that the Appellants were entitled to the credit of CVD paid on the re-imported goods.In conclusion, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief as per law. The judgment clarified that goods initially cleared and brought back for re-making or other reasons are considered inputs under CENVAT Credit Rules, making the Appellants eligible for the credit of CVD paid on re-imported goods.