By TIOL News Service

MUMBAI, MAR 06, 2014, DURING the period October 2011 to November 2011, the appellant availed CENVAT credit of Rs.68.45 lakhs of the CVD paid against re-importation of their goods viz. cotton fabrics and made-up articles exported earlier. The goods had to be re-imported because the overseas buyer rejected the consignment citing defects.

The Revenue authorities denied this credit by concluding that since the goods exported were not duty paid and hence, when it was returned to the factory, after rejection, it cannot be admissible to CENVAT credit under Rule 16 of the CER, 2002.

Against this order of the CCE, Kolhapur , confirming the demand and imposing equivalent penalty, the appellant is before the CESTAT.

The appellant narrated the facts and while justifying the credit availed did not plead any financial hardship.

The Revenue representative submitted that Rule 16 of the CER, 2002 is very specific and, therefore, the applicant is not entitled to CENVAT credit.

The Bench extracted the contents of rule 16 of CER, 2002 and observed -

“…On a preliminary analysis of Rule 16 of the Central Excise Rules, 2002, prima facie, we are of the view that any goods on which duty has been paid at the time of removal when brought back to the factory for processes mentioned therein, would be eligible to CENVAT credit. In these circumstances, we are of the opinion that the applicant is not able to make out a prima facie case for total waiver of the dues adjudged. Keeping in view the interest of revenue as well as the principles of law settled by the Hon'ble Supreme Court and High Courts on the issue of disposal of stay applications, we direct the applicant to deposit 50% of the CENVAT credit involved in the present case. On deposit of the same, the balance dues adjudged would stand waived and its recovery stayed during the pendency of the appeal….”

In passing: Certainly, this is not the last that we hear of this case. Related words - re-importation, inputs, Chapter note 12 to chapter 61, Notification 158/95-Cus., refund etc.

(See 2014-TIOL-352-CESTAT-MUM)