2026 (4) TMI 209 - AT - Central Excise

Transferee use of SHIS scrips and TUFS benefits does not breach the policy bar on simultaneous claims.

The bar on simultaneous use of Status Holder Incentive Scrips (SHIS) and Technology Upgradation Fund Scheme (TUFS) benefits under the Foreign Trade Policy ... Wrongly availed Cenvat credit by simultaneously availing Status Holder Incentive Scrips and Technology Upgradation Fund Scheme benefits in contravention of the Foreign Trade Policy and the relevant customs notification - Cenvat credit on imported capital goods. Availment and utilization of ‘Status Holder Incentive Scrips’ - HELD THAT: - As per DGFT letter dated 07.01.2014 and 14.10.2014, TUFS benefit is said to be availed in the year in which the loan has been sanctioned to the unit. The appellant has therefore availed benefit of TUFS in the year 2013-14 and in that year, benefit of SHIS has not been availed on the basis of exports made by them. In fact the appellant has never availed benefit of SHIS for exports made by them as the appellants are transferee license holder only.' The Tribunal held that para 3.16.2 of the Foreign Trade Policy bars SHIS only in respect of exports made during the year in which the status holder has also availed TUFS. On the facts found, the appellant had never availed SHIS on the basis of its own exports; it was only a transferee holder of SHIS originally issued to other status holders on the basis of their exports for the eligible years. Its use of those scrips during later years for payment of duty on imported capital goods could not be treated as simultaneous availment of SHIS and TUFS on its own exports. The Tribunal further held that Notification No. 104/2009-Cus specifically permitted availment of drawback or Cenvat credit of additional duty debited in the scrip, and neither the Foreign Trade Policy nor the notification barred such credit to a transferee licence holder. The Commissioner's contrary view was therefore based on a misinterpretation of the policy and the very foundation of the demand failed. [Paras 6, 7] The demand of wrongly availed Cenvat credit, with interest and penalty, was held unsustainable and the appeal was allowed. Final Conclusion: The Tribunal set aside the impugned order, holding that the appellant, being a transferee holder of SHIS and not a beneficiary on the basis of its own exports, had not violated the Foreign Trade Policy by availing TUFS and using purchased SHIS scrips. The demand of credit, interest and penalty was accordingly annulled. Issues: Whether the appellant, as a transferee of Status Holder Incentive Scrips, had wrongly availed Cenvat credit by simultaneously availing Status Holder Incentive Scrips and Technology Upgradation Fund Scheme benefits in contravention of the Foreign Trade Policy and the relevant customs notification.Analysis: Paragraph 3.16.2 of the Foreign Trade Policy 2009-14 bars a Status Holder from claiming Status Holder Incentive Scrips for exports of a year in which Technology Upgradation Fund Scheme benefit is availed. The restriction operates on the original status holder/exporter whose exports generate the entitlement. On the facts, the appellant did not obtain the scrips on the basis of its own exports, but purchased them from other license holders, and used them for duty debit on imported capital goods. The capital goods were imported against the duty credit scrips under Notification No. 104/2009-Cus dated 14.09.2009, which itself permits the importer to avail Cenvat credit of the additional duty. The circular clarification and the scheme conditions support the view that the bar against simultaneous benefit does not extend to a transferee license holder in these circumstances.Conclusion: The appellant was not in contravention of the Foreign Trade Policy by simultaneously availing TUFS and using transferred SHIS scrips, and the denial of Cenvat credit and consequential demand and penalty were unsustainable.Final Conclusion: The credit demand, interest, and penalty did not survive, and the appellant succeeded in the appeal.Ratio Decidendi: The prohibition on availing SHIS and TUFS in the same year applies to the original exporter claiming SHIS entitlement for its own exports, and does not extend to a transferee license holder purchasing and using SHIS scrips for duty payment on imported capital goods, where the governing notification permits Cenvat credit.