2023 (11) TMI 414 - AT - Central Excise

Tribunal Allows Restoration of CENVAT Credit for Exported Transformer Repairs, Invalidates Revenue's Appeal.

The Tribunal ruled in favor of the appellant, a transformer manufacturer, allowing the restoration of CENVAT credit for inputs used in repairing exported ... Reversal of CENVAT Credit under protest - inputs deployed for repairs - deployment of the impugned goods not for manufacture but for repair and which was neither within the ambit of rule 2(k) of CENVAT Credit Rules, 2004 nor cleared ‘as such’ within flexibility afforded by rule 4 of CENVAT Credit Rules, 200 - HELD THAT:- Nonetheless, the repair executed by the appellant, even if not manufactured, would be tantamount to service and to the extent that the impugned goods had been deployed in rendering of ‘taxable service’ or service that had exported, eligibility for availment of CENVAT credit cannot be denied. Accordingly, there is no merit in the appeal of Revenue which is dismissed. In view of the finding that the impugned goods constitute ‘inputs’ in terms of rule 2(k) of CENVAT Credit Rules, 2004, rejection of claim for restoration of credit is not tenable. Accordingly, the applications are restored to the original authority for disposal in terms of section 11B of Central Excise Act, 1944 Appeal disposed off. Issues involved: The issues involved in the judgment are the eligibility of CENVAT credit for inputs used in repairs of exported transformers, the rejection of claim for restoration of credit, and the applicability of circular no. 283/117/96-CX dated 31st December 1996 of Central Board of Excise & Customs (CBEC) regarding inputs used in repairs.Eligibility of CENVAT credit for inputs used in repairs: The appellant, a manufacturer of transformers, exported some transformers for repairs and then re-exported them after repairs, erroneously reversing credit for inputs used in repairs. The original authority allowed the restoration of this credit, which was later reversed by the first appellate authority. The Tribunal remitted this decision in an order dated 23rd March 2016, leading to the present dispute. The central excise authorities objected to the deployment of goods for repairs, claiming they were not within the ambit of CENVAT Credit Rules, 2004. However, the Tribunal found that even if the repairs did not result in manufacturing, they constituted a service, making the appellant eligible for CENVAT credit. The appeal of Revenue was dismissed on this ground.Rejection of claim for restoration of credit: The appellant sought restoration of credit reversed by the central excise authorities for goods used in repairs and subsequently re-exported. The central excise authorities rejected this claim, leading to an appeal before the first appellate authority and then to the Tribunal. The Tribunal found that the impugned goods constituted inputs under rule 2(k) of CENVAT Credit Rules, 2004, and therefore, the rejection of the claim for restoration of credit was not tenable. The applications were restored to the original authority for further disposal.Applicability of circular no. 283/117/96-CX: The appellant had been seeking restoration of credit that they were deprived of by the central excise authorities based on circular no. 283/117/96-CX dated 31st December 1996 of CBEC. The Tribunal found that the impugned goods used in repairs were indeed inputs under the CENVAT Credit Rules, 2004, and therefore, the rejection of the claim for restoration of credit was not valid.The judgment was pronounced in the open court on 08/11/2023.