Appeal granted on credit denial post Let export order; appellant can choose compliance method.

The tribunal allowed the appeal on the denial of credit for input services post Let export order and granted the appellant the right to choose the method of compliance for reversing the credit. The third issue regarding the invocation of the second proviso to Section 11AC(1) was not pursued and, therefore, not allowed. The appeal was disposed of accordingly.

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Issues:
1. Denial of credit on input services of pre-shipment charges and terminal handling charges for export of goods.
2. Right of the appellant to choose an option to reverse the amount under Rule 6(3) of Cenvat Credit Rules.
3. Invocation of the second proviso to Section 11AC(1) of the Central Excise Act, 1944 for the disputed period.

Analysis:

Issue 1: Denial of Credit on Input Services
The appellant filed an appeal against the denial of credit on input services of pre-shipment charges and terminal handling charges for the export of goods. The appellant argued that the denial was based on a circular that presumed no further activity was required after the Let export order, which conflicted with the actual activities undertaken by the exporter post-order. The circular was found inapplicable as the appellant continued to possess the goods even after the Let Export order, managing inspections and handling. The tribunal allowed the appeal on this ground, recognizing the appellant's ongoing involvement post-order.

Issue 2: Right to Choose Reversal Option under Rule 6(3)
The second issue revolved around the appellant's right to choose the method of compliance under Rule 6(3) of the Cenvat Credit Rules for reversing the credit related to trading activities. The first Appellate Authority had denied the appellant's chosen reversal option, citing the authority's discretion post-transaction. However, the tribunal found no legal basis for the Revenue to exercise such discretion, emphasizing that the choice of compliance method lies exclusively with the assessee. The tribunal modified the impugned order, allowing the appellant to reverse the amount as per their chosen method of compliance under Rule 6.

Issue 3: Invocation of Second Proviso to Section 11AC(1)
The third issue, regarding the invocation of the second proviso to Section 11AC(1) of the Central Excise Act, 1944 for the disputed period, was not pressed by the appellant's counsel. Consequently, the appeal on this count was not allowed by the tribunal.

In conclusion, the tribunal allowed the appeal on the denial of credit for input services post Let export order and modified the impugned order to grant the appellant the right to choose the method of compliance for reversing the credit. The third issue was not pursued and, therefore, not allowed. The appeal was disposed of accordingly.

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