Sending of defective parts of capital goods to the foreign supplier for repair and return and availing of cenvat credit there on.

[G GOSWAMI]

We the manufacturer of engineering products imported machines for manufacturing excisable goods. Some of which are more than 10 years old, some of which are 4-5 years old and some of which are 1-2 years old.Cenvat credit was availed on those machines. Now we require to send some defective parts of those machines to the foreign suppliers/agency for repair and return. CVD/SAD as applicable will be paid on those defective parts after returning to us. The said reimported parts will be fitted to their respective machines. Under this circumstances kindly opine that:

1. Whether the said defective parts could be sent to the foreign country under LUT ?-or any other procedure?

2. Whether cenvat on CVD/SAD credit on the said reimported parts/capital goods could be available?

Regards,

G.GOSWAMI

AI Summary

Cenvat credit on reimported repaired parts permitted where customs duty on repair charges is paid and proper entries are filed.
Defective components of capital goods may be exported under bond/LUT with NOC/GR Waiver and specific export documents identifying parts; on repair they are re imported by filing a bill of entry referencing the export and paying customs duty only on repair charges. The importer may avail CENVAT credit on CVD/SAD paid on such customs duty against prescribed duty paying documents, subject to return/reversal obligations where regulatory time limits apply, and may seek administrative clarifications if required.