2011 (3) TMI 1556 - HC - Central Excise

Summary

Issues involved: The judgment involves the rejection of a rebate claim by the Commissioner of Central Excise, Raigad, regarding duty paid on the export of capital goods by reversing input credit, based on the interpretation of relevant rules and notifications.

Summary:

Issue 1: Reversal of credit and entitlement to rebate
The Commissioner contended that reversal of credit does not constitute payment of duty under Rule 18 of the Central Excise Rules, 2002, thus challenging the rebate claim. However, the Court cited a circular from the Central Government to support that reversal of input credit is a recognized method for paying duty on the final product, making the rebate claim allowable.

Issue 2: Direct export from the factory
The revenue argued that the capital goods were not exported directly from the manufacturer's factory as required by specific notifications, leading to the rejection of the rebate claim. The Court dismissed this argument, referencing a previous case where similar contentions were rejected, emphasizing that direct export is not a prerequisite for claiming rebate.

Issue 3: Use of imported capital goods before export
The revenue claimed that since the imported capital goods were used by the assessee before export, they could not be considered "removed as such" under Rule 3(5) of the CENVAT Credit Rules, 2004. The Court disagreed, stating that even if the capital goods were used before export, they still retained their character as capital goods, making the assessee eligible for rebate on duty paid upon export.

In conclusion, the Court found no merit in the revenue's contentions, upholding the entitlement of the assessee to claim rebate on duty paid for the export of capital goods by reversing input credit. The petition was dismissed with no order as to costs.