Custom, Excise & Service Tax Tribunal
Cipla Limited vs Commissioner Of Central Excise, ... on 8 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1126/2011 (Arising out of Order-in-Appeal No. PKS/566/BEL/2010 dated 5.4.2011 passed by the Commissioner (Appeals) Central Excise, Mumbai-III) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
======================================================
Cipla Limited
:
Appellant
VS
Commissioner of Central Excise, Mumbai-III
:
Respondent
Appearance
Shri Rajesh Ostwal, Advocate for Appellant
Shri H.M. Dixit, Asstt. Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 08/03/2016
Date of decision: 08/03/2016
ORDER NO.
This appeal is directed against Order-in-Appeal No. PKS/566/BEL/2010 dated 5.4.2011 passed by the Commissioner (Appeals) Central Excise, Mumbai-III whereby the Ld. Commissioner upholding the Order-in-Original No. KDN/11/ASS/2007 dt. 19.11.2007 rejected the appeal filed by the appellant.
2. The fact of the case is that the appellant has availed Cenvat Credit in respect of capital goods which was not installed and used in the factory of the appellant. Subsequently the said capital goods was exported under drawback in terms of Section 74 of the Customs Act, 1962. The show cause notice was issued proposing disallowance of the credit on the ground that the capital goods was not put to use in the factory and cleared as such in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. If the capital goods is removed as such the duty equal to Cenvat Credit is required to be paid. The adjudicating authority has confirmed the demand of Cenvat Credit. Aggrieved by the adjudication order, appellant filed appeal before the Commissioner (Appeals), who upheld the Order-in-Original, on two counts (i) The clearance of capital goods as such requires reversal of Cenvat Credit, (ii) The appellant had claimed the drawback under Section 74 of the Customs Act, 1962 therefore they are not entitled for Cenvat Credit.
3. Shri Rajesh Ostwal, Ld. Counsel appearing for the appellant submits that the capital goods on which the credit was taken has been admittedly exported, therefore on export of capital goods no reversal is required to be made. In this support he placed reliance on the following judgments:
(i) Glass and Ceramic Decorators Vs. Commr. of C. Ex., Mumbai-I 2014 (305) E.L.T. 133 (Tri.-Mumbai)
(ii) Essel Propack Ltd. Vs. Commissioner of Central Excise, Thane 2014 (314) E.L.T. 584 (Tri.-Mumbai) As regard the claim of drawback, he submits that though the claim of drawback is of 98% in terms of Section 74 of the Customs Act, 1962. Subsequently they realized that their mistake as Cenvat Credit was availed on the capital goods, to this effect they submitted a letter of dt. 26.10.2010 to the drawback department for reduction of drawback. The drawback department also taken a note of that letter dt. 21.2.2011 accordingly the drawback claim was reduced to the extent of Cenvat credit therefore this ground is not sustainable.
4. On the other hand, Shri H.M. Dixit, Ld. Assistant Commissioner (A.R.) appearing on behalf of Revenue reiterates the findings of the impugned order. He submits that there is no provision in Cenvat Credit Rules to clear the capital goods under bond for export. The only provision is under Rule 3(5) of the Cenvat Credit Rules which provides for payment of duty on removal of capital goods as such without being put to use.
5. I have carefully considered the submissions made by both the sides. Though the appellant have taken credit on capital goods but cleared as such for export. It is settled position, that whatever goods are exported from India, duty suffered on the said goods cannot be exported. Therefore, the capital goods which was exported by the appellant either can be cleared under claim of rebate or drawback under bond. In such a situation Cenvat Credit is not required to be reversed, this issue has been settled in the various judgments in the case of Glass and Ceramic Decorators (supra) the Tribunal pass the following order:
5.1?It is not in dispute that the capital goods imported by the appellant have been exported. On export of capital goods, the appellant is eligible for rebate of the duty paid thereon under Rule 18 of the Central Excise Rules or the appellant can export the goods without payment of duty under bond under Rule 19 of the said Rules. In respect of the goods on which credit has been taken, Circular issued by Board in 1996 as well as in 2000, clearly says 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. The decision of the Tribunal in the case of Videocon International Ltd. (supra) also confirms this view.
5.2?We also note that in the case of Essel Propack Ltd. decided vide Order No. A/1023/2013/EB/C-II, dated 20-11-2013, an identical issue came up for consideration before this Tribunal, where the capital goods procured on which credit was taken was subsequently re-exported without reversal of credit and this Tribunal in the said case held that the appellant is not required to reverse Cenvat credit on the capital goods exported.
6.?Following the ratio in the above decision, in the present case also, we hold that the appellant is not required to reverse Cenvat credit taken on the capital goods, which was procured and subsequently re-exported. Accordingly, we allow the appeal for consequential relief, if any, in accordance with law. Similarly, in the case of Essel Propack Ltd.(supra) the Division Bench of this Tribunal on the identical issue held as under:
6.?In this case it is a fact on records that these capital goods have been procured in the year 1997 and availed CENVAT credit and the same has been cleared for export on 19th July, 2005. As per the C.B.E. & C. Boards letter 345/2/2000-TRU, dated 29-8-2000 wherein it has been clarified that under the existing procedure a manufacturer can export the goods under bond without payment of duty. This is a facility that is available to the manufacturer under excise procedure. In such case, the appropriate duty of excise that is payable is nil. Therefore, there is no bar for a manufacturer to remove the inputs or capital goods for export under bond within the explanation referred to above. In the case of Videocon International Ltd. (supra) this Tribunal considered the issue and held that in such case the appellant is not required to reverse CENVAT credit availed on the capital goods. Therefore, following the ratio of the decision in the case of Videocon International Ltd. (supra), we set aside the impugned order holding that the appellant is not required to reverse the credit at the time of exporting of the goods under bond.
In view of the above judgments, it is settled that the capital goods on which credit was availed, if it is cleared for export there is no need to reverse the Cenvat credit. As regard the drawback claim by the appellant, the appellant is not entitled for the drawback in respect of the Cenvat Credit availed by them. It is observed from the record that the appellant has proposed to reduce the drawback claim to the extent of Cenvat Credit availed by them and the same has been confirmed by the drawback department in their letter. For this reason credit cannot be denied on the ground that the appellant have made a claim of drawback. As per the above discussion, I am of the considered view that the appellant is legally entitled for the Cenvat Credit and need not to reverse the Cenvat Credit on the export of capital goods. The impugned order is set aside. The appeal is allowed.
(Pronounced & Dictated in court) (Ramesh Nair) Member (Judicial) SM.
2Appeal No. E/1126/2011