News Update

Vizag DRI sleuths seize 1161 kg Ganja concealed under gravel material being transported by lorryBefore GST roll-out Union of India to scrap 16 Cesses of Excise and Service Tax; to cost Rs 65,000 Crore to ExchequerPM’s constituency Varanasi to host third G-20 Framework Working Group meeting on WednesdayIndian Navy to de-induct Long-Range Maritime Patrol Aircraft after 29 yearsCBI Court convicts former Oriental Bank Manager & othersST - Claim for exclusion of amounts on basis of acting as pure agent can be made only if all conditions for such concept are fulfilled: CESTATCBEC to be renamed as CBIC; to have 101 GST Commissionerates, including 50 Appeals CommissioneratesApplications invited for First Secretary (Legal) at PMI at WTO, GenevaPangs of GST - Govt sets up Working Groups to address peculiar problems of industryCX - Annual Production Capacity - Actual Production vs deemed production - Legal Fiction vs Presumption - Supreme Court refers matter to Larger BenchCBDT directs officers to grant interest waiver in certain casesOROP - Pension to be reviewed every 5 yearsIncome Tax searches lead to seizure of Rs 3625 CroreUnclaimed Deposits in Banks & Insurance Companies exceed Rs 8000 CroreCST compensation to States: Centre to release Rs 5834 Crore before Mar 31CCI imposes Rs 51K penalty on Kerala MP heading film association as PresidentCX - Any relief under doctrine of promissory estoppel can be enforced only in hands of Courts - Tribunal cannot arrogate to itself such powers: CESTAT4.5% Indians suffer from depression: MinisterDelhi Insurance Ombudsman Office gets ISO certificationCommissionerates fail to pay court fee stamp - CBEC releases ListGST Bills copies being printed; to be tabled on MondayTrump's attempt to substitute Obamacare failsGovt approves nine FDI proposals involving proposal worth Rs 659 CroreCustoms Duty on Sunflower seeds (1206 0090) for the purpose of extraction and refining of oil reduced to 10% for the period 1st April 2017 to 30th September 2017GST high on Alcohol Manufacturing IndustrySFO in UK doing well to deal with foreign bribery casesIndian Cement Industry accounts for only 7% of global needsI-T - Excess stock found during survey which did not belong to assessee but to its Karta in his individual capacity, cannot be added to assessee's closing stockCX - It is 'nature of order' of Tribunal and not 'scope of appeal' that determines maintainability: HCCus - DRI officials at wedding premises - Calling payments as voluntary is turning a blind eye to harsh realities: HCST - Since CESTAT has remanded matter, it cannot be said that any substantial question of law would arise for consideration: HC
 
CX – Appellant not liable to reverse credit on inputs used in manufacture of final product when it was dutiable but lying in stock when exempted: CESTAT

By TIOL News Service

MUMBAI, MAR 20, 2017: THE appellant is engaged in the manufacture of Bulk Drugs and pharmaceutical products [Ch. 29, 30].

The goods which were manufactured and exported became exempted vide notification No. 6/2002-CE dated 1-3-2002. The appellant paid an amount of Rs.28,96,762/- for the credit attributed to inputs contained in the semi-finished goods lying in stock as on 01.03.2002. They also paid further amount representing the credit taken on inputs lying unutilized as on 01.03.2002. Some of these inputs were later used for manufacture of goods which were exported under bond/undertaking.

The appellant filed a refund claim on the ground that in view of Larger Bench judgment in Ashok Iron - 2002-TIOL-274-CESTAT-DEL-LB, the credit availed and utilized during the period, when final product was dutiable was not required to be paid back, when the final product subsequently became exempt. They also filed two more refund claims on the ground that the final product having been exported under bond, the credit was not required to be reversed.

The Adjudicating authority rejected the claim as not maintainable on the ground that goods were exempted as on 01.03.2002. It was also held that refund is eligible only by way of rebate of duty paid on excisable goods and used in the exports goods. However, since the appellant have not followed the procedure as prescribed under Notification No. 41/2001-CE(NT) dated 26-6-2001, for claiming rebate of such duty, the refund claim cannot be allowed.

The Commissioner(A) upheld this order and hence an appeal was filed before the CESTAT in the year 2006.

The matter was heard in October 2016 and an order was passed recently.

After considering the submissions made by both sides, the Single Member Bench noted that the issues to be decided in the present appeal were -

(a) Whether the appellant is liable to reverse/pay CENVAT Credit on the inputs already used in the manufacture of final product when it was dutiable but lying in stock as on 01.03.2002 when final product became exempted.

(b) Whether the appellant is required to reverse the CENVAT credit on the input lying in stock as on 01.03.2002 but subsequently used in the manufacturing of final product which was cleared for export under bond/undertaking.

(c) As a result whether the appellant is entitled for the refund of the amount reversed /paid on both above counts.

The CESTAT observed thus –

"5.1 As regard the point (a), issue has been settled in the larger judgment in case of Ashok Iron (supra) that CENVAT credit in respect of input contained in the final product lying in stock as on date when final product became exempted, no CENVAT credit is required to be reversed on the ground that at the time of taking credit the input used in the manufacture of final product which was dutiable.

5.2 As regard the judgment of the Raghuvar (India) Ltd Vs. CCE - 2002-TIOL-137-CESTAT-DEL-LB heavily relied upon by the Revenue, I observed that due to case of Raghuvar (India) Ltd (supra) the judgment of Ashok Iron (supra) has not been departed, for the reason that in case of Ashok Iron it was held that credit on input contained in finished goods lying in stock on date when final product became exempted, need not to be reversed. Raghuvar (India) Ltd (supra) decision applies only in the case that on the date of exemption, input on which credit was taken was lying in stock, as such, therefore,Raghuvar (India) Ltd (supra) judgments is not applicable in the present case.

5.3 As regard the Cenvat credit on the input lying in stock but subsequently it was used in the manufacture and clearances of export of goods under bond/undertaking, the credit on such input is admissible to the appellant in terms of Rule 6 of Cenvat Credit Rules, 2004. The judgment relied upon by the Ld. Counsel supports the case of the appellant."

Extracting the decision passed by the Tribunal on the very same issue in the case of Godrej Foods Vs. CCE - 2016-TIOL-3390-CESTAT-MUM and noting that almost all judgments relied upon by the rival parties were discussed, the Bench concluded that the appellant is not required to reverse /pay the CENVATamount attributed to the input contained in finished goods lying in stock as on 1-3-2002 as well as on the input lying in stock as on 1-3-2002 but used in the manufacture and clearances of export goods.

The impugned order was set aside and the Appeal was allowed with consequential relief.

(See 2017-TIOL-902-CESTAT-MUM)


POST YOUR COMMENTS