cenvat credit on re-imported goods

[sv bhasker]

A manufacturer has exported goods through merchant exporter. However, due to quality problems, goods are re-imported by the merchant exporter after paying of applicable customs duties for sending back to original manufacturer. Bill of entry is in the name of merchant exporter, who is not registered with CE dept for passing on cenvat credit.. Please advise with suitable circulars, case laws as to how credit  of the customs  duty paid can be taken by the manufcaturer in the above situation.

Regards.

Need some more clarity: 

Is shipping bill filed by Merchant exporter on his name while exporting the goods?  Goods are exciseable or not ? Manufacturer name has mentioned any where in shipping bill ?

Some general information with reg to reimported goods for repair / return. May be useful for you.

Final products cleared on payment of duty can be brought back for repairs etc., by following prescribed procedures.

	Duty paid goods can be brought in factory for being re-made, refined, reconditioned or for any other reason under rule 16.
	The goods need not have been manufactured by assessee himself.
	Cenvat credit of duty paid on such goods can be taken, on basis of duty paying documents of such goods.
	After processing/repairs, if the process amounts to ‘manufacture’, excise duty based on assessable value is payable.
	If process does not amount to manufacture, an ‘amount’ equal to Cenvat credit availed should be paid [rule 16(2)].
	If some self manufactured components are used, duty will have to be paid on such components.
	Buyer/recipient of such goods can avail Cenvat credit of such amount/duty.
	If the above procedure cannot be followed, permission of Commissioner is required [rule 16(3)].

 

[sv bhasker]

Thanks for the reply sir. But it appears that Rule 16 will apply to goods manufcatured in India as it talks of duty paid at the time of removal. You may please see 'time of removal' is defined under Section 4 of CE Act,1944.

[Rishabh Singhvi]

Dear Sir,

I do not think we can resort to Rule 16 where goods were export under LUT and re-imported for repair purposes since there was no duty paid at the time of removal. However where at the time of re-import I have paid import duty on the goods then I have to treat this as any other input and claim CENVAT credit under Cenvat Rules. Rule 16 does not give benefit of credit of import duty paid on removal.

Therefore you may not get credit under CENVAT rules where the repair does not amount to manufacture.

Regards,

Rishabh

AI Summary

Cenvat credit on re-imported goods: import duty paid on re-import may be claimable as input credit with documentary proof.
Cenvat credit on re-imported goods depends on whether duty was paid at removal and on duties paid on re-import. Rule 16 permits re-introduction of duty-paid goods for repair or remaking and allows cenvat credit based on duty-paying documents; manufacture arising from processing triggers excise on assessable value, otherwise an amount equal to credit must be paid. Exports under bond/LUT (no duty at removal) fall outside Rule 16; if import duty is paid on re-import, that duty can be claimed as cenvat credit subject to documentary proof, while Rule 16 does not grant credit for import duty where repair is not manufacture.