2006 (7) TMI 441 - AT - Central Excise

Summary

Issues:
1. Availment of Cenvat credit on inputs and capital goods for exported transformers.
2. Re-importation of transformer for repairs and subsequent re-exportation.
3. Interpretation of repair activities in the context of Cenvat credit eligibility.
4. Applicability of Notification No. 43/2001-C.E. on export goods.

Analysis:
1. The appeal challenged the Order-in-Appeal passed by the Commissioner of Central Excise, Cochin, regarding the availment of Cenvat credit by the appellants on inputs and capital goods for manufacturing transformers and subsequent export.

2. The case involved the export of a transformer to Oman, its re-importation for repairs on a free-of-cost basis, and the subsequent re-exportation after repairs. The repair activities utilized various inputs valued at Rs. 2,81,970, with a credit availed of Rs. 45,115. The lower authorities deemed the activities as repairs, ordering the reversal of Cenvat credit with interest.

3. The Commissioner (A) upheld the lower authority's decision, stating that repair does not constitute manufacture, thus disallowing the input credit. However, the Tribunal noted that the inputs used in repairs were contained in the exported goods, citing provisions allowing excise rebate for inputs used in processing export goods. Consequently, the Tribunal found no merit in the Commissioner's order and allowed the appeal with consequential relief.

4. The appellant's representative referenced Notification No. 43/2001-C.E., highlighting provisions for excise rebate on inputs used in the processing of export goods, including activities not amounting to manufacture. The Tribunal, after careful consideration, agreed with the appellant's interpretation, emphasizing that the inputs used in repairs for re-exportation qualified for Cenvat credit under the notification.

In conclusion, the Tribunal overturned the lower authorities' decision, ruling in favor of the appellants based on the eligibility of Cenvat credit for inputs used in the repair and subsequent re-exportation of transformers, in accordance with the applicable notification and provisions for excise rebate on processing export goods.