Glass and Ceramic Decorators, (Appellant) imported Glass Printing Machine (capital goods) during the year 2003-04 and availed Cenvat credit on the same of Rs. 23,33,282/- in two consecutive financial years i.e. 2003-04 and 2004-05. Subsequently, the Appellant exported the capital goods in 2006 under bond without reversal of Cenvat credit.
The Department contended that the Appellant had not put the capital goods to use and, therefore, they were not eligible to take the Cenvat credit. Accordingly, the Appellant was required to reverse the Cenvat credit taken on capital goods which were cleared as such from the factory.
The Hon’ble CESTAT, Mumbai initially had remanded back the case to the Adjudicating Authority for consideration afresh and to pass a speaking order taking into account the various evidences produced by the Appellant. However, the Adjudicating Authority confirmed the demand of Cenvat credit which was further upheld by the lower Appellate Authority. Hence, the Appellant again preferred an appeal before the Hon’ble Tribunal.
The Hon’ble Tribunal noted that on export of capital goods, the Appellant can either claim rebate of the duty under Rule 18 of the Central Excise Rules, 2002 (“the Excise Rules”) or the Appellant can export the goods without payment of duty under bond under Rule 19 of the Excise Rules. Further, reliance was placed on the Central Board of Excise & Customs circular dated December 31, 1996 and F. No. 345/2/2000-TRU dated August 29, 2000, which stipulates that the manufacturer assessee is entitled to clear the inputs or capital goods for export (on which credit has been taken) under bond without payment of duty.
Further, the Hon’ble Tribunal relied on following judgments:
Wherein it was held that assessee is not required to reverse Cenvat credit on the capital goods, which are subsequently reexported.
The Hon’ble Tribunal on the basis of the above finding held that the Appellant is not required to reverse the Cenvat credit taken on capital goods procured and subsequently re-exported.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)