News Update

Revenue Secretary urges CMs to expedite passage of SGST ActExit Polls - AAP staring at humiliating defeat; BJP likely to score historic winACC appoints IRS officer Ravi Singh as Addl Private Secretary to Power MinisterACC appoints IRS officer Ravi Singh as Addl Private Secretary to Power MinisterUSA favours 'reciprocal' free trade: Treasury ChiefShillong Customs seizes 800 kg of ganja concealed in especially-designed cavity in a truckCBEC Chairperson calls for speedy GST Awareness CampaignINTERPOL drive against illicit firearms - 149 arrested across EuropeGreen Bond Market Has Grown Healthy In 5 Yrs: IREDAIndia turning into hub of international arbitration: Chief Justice of IndiaTaliban forces kill over 100 Afghan soldiersGST Council looking for applicants to fill up CSSS postsEmerging economies account for 75% of global growth: FMDuty Credit Scrip can be utilised/debited for payment of Custom Duties in case of EO defaults - Para 3.18(a) of FTP 2015-20 amendedServices Exports from India Scheme - Eligible period extended up to 31.3.2017W.e.f. 01.06.2017 only those applications for grant of gold dore would be considered where the applicant refinery holds a valid licence from BISGlobal forex remittances shrink but India continues to be No 1International prices soar; Less availability of milk products this summer: GovtMGNREGA - One crore assets geotaggedInter-Ministerial Delegation going to participate in Basel conventionsRailways to organise Global Technology Conference on SafetyST - Once activity undertaken of supply of food to its workers at subsidized rate is understood to be part of Petitioner’s industrial obligation, it is unthinkable that same can be construed as service: HCGoods, after a tour of service abroad, imported by or along with a unit of the Army, Navy, Air Force or CRPF exempted from BCD, CVD & SAD subject to specified conditionsUS Fed Paper says GST may boost India's GDP by over 4%Garib Kalyan Yojana- If tax paid by Mar 31, declaration can be filed by May 10Removal of Cyprus as notified jurisdiction u/s 94A - CBDT clarifies removal notfn to have retro effect11th Civil Services Day: PM cautions officers against excessive use of social mediaApex Court questions Govt decision to link Aadhaar with PANUSD 250 bn Tax Bill - Australian Federal Court rules against ChevronCricket Betting case - CBI chargesheets IRS officer & others
 
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