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Enpay Transformer Components India Pvt. Ltd. Vs. C.C.E. & S.T., Vadodara-I - (Customs, Excise and Service Tax Appellate Tribunal) (23 Feb 2021)

Export of goods does not attract duty as the export goods can be cleared either under bond or under claim for rebate



The brief facts of the case are that, the Appellant had imported certain capital goods under duty free EPCG scheme in the year 2011. The said capital goods after being put to use were re-exported and the Appellant had paid Rs. 1,96,33,568 under the head of Custom Duty and later on availed Cenvat Credit of the said custom duty in the month of March, 2014 and September, 2014. During Audit, on scrutiny of various challans under which custom duty was paid (On re-exportation of capital goods), it was observed that, said amount paid as custom duty were in fact payments made against pending dues and not for the bills for the purpose of payment of custom duty. Hence, the audit has raised the objection on availment of Cenvat credit.

The Appellant agreed with the audit objection and reversed the credit however, subsequently vide letter dated 30th November, 2015 to the Assistant Commissioner, Appellant said that, audit claim have been paid "under protest". Also they claim that they are eligible for depreciation in terms of Rule 3(5A) of the Cenvat Credit Rule, 2004 and requested re-credit which however denied as the Appellant had failed to fulfill the EPCG obligation and he was required to pay the custom duty as per custom authorities direction and this custom duty and cess are ineligible for credit under Cenvat Credit Rules, 2004.

Based on the said audit objection, the Show Cause Notice was issued. The show cause notice had been adjudicated by the Order in Original. Being aggrieved with the said Order-in-Original, the Appellant filed the appeal before the Commissioner (Appeals), who vide the impugned order upheld the Order-in-Original in toto and rejected the appeal filed by the Appellant before him.

Though the Appellant had imported duty free capital goods under EPCG but subsequently the same was re-exported after being put to use for substantial time. The Appellant claimed the Cenvat Credit in respect of the duty paid on re-exportation of the capital goods. The Lower Authorities have denied the Cenvat credit on the ground that, as per Rule 3(5A) of Rules, there is no provision to clear the capital goods without payment of duty for export. Present Tribunal is of the prima facie view that, though there is no mention about export of capital goods in Rule 3(5A) of Rules but in general, any export of goods does not attract duty as the export goods can be cleared either under bond or under claim for rebate.

The Appellant also vehemently argued that, even if Cenvat credit is not available, since the goods have been exported, the Appellant are entitled for rebate claim. This is a vital issue raised by the Appellant before the Adjudicating authority as well as the Commissioner (Appeals). The same should have been considered in detail and proper finding should have been given however, both the authorities failed to properly consider the issue of rebate claim in accordance with law.

Both the authorities have not considered the overall issue on the basis of the legal provision and also on the various judgments based on the issue. Therefore, in the interest of justice matter is remitted to the Adjudicating Authority. The impugned order is set aside and appeal is allowed by way of remand to adjudicating authority.


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