TMI Blog2011 (3) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... ive of such bought out parts and on that ground also the demand for reversal of the CENVAT credit does not sustain. It should also be observed herein that the transaction in the instant case is that of exports and it is the avowed policy of the government to promote export by relieving the burden of taxes on the products exported and also on the products consumed in the manufacture of the goods exported. Therefore, the rules whether they be CENVAT Credit Rules or Central Excise Rules have to be read harmoniously to give effect to this objective. Thus in the instant case apart from the fact that the appellant is rightly entitled to the CENVAT credit on the goods exported, even from a policy perspective, such credit is permissible. In favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,644/- out of which an amount of Rs. 1,74,88,246/- was sanctioned and an amount of Rs. 70,87,398/- was proposed to be rejected. On scrutiny of claims made by the appellant the department found that the bought out items have also been cleared by the appellant under the guise of manufacture of goods and these were basically in the form of spares and the assessee had availed CENVAT credit on these goods. The department found that the bought out items has not been used in the manufacture and therefore they are not eligible for CENVAT credit and accordingly a show-cause notice dated 10/03/2005 was issued to the appellant proposing to disallow CENVAT credit and also proposing to reject the rebate claim totally amounting to Rs. 70,87,398/-. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spares individually. They have further contended that as per CBEC Circular No. 283/117/96-CX dated 31/12/1996, it has been held that if inputs are cleared as such for export on payment of duty under claim for rebate the exporter would be entitled to avail credit of the duty paid on such parts whether the export has taken place under bond procedure or under claim for rebate of duty. They place reliance on the judgment of the Supreme Court in the case of Commissioner of Central Excise Customs, Vadodara vs. Narmada Chematur Pharmaceuticals Ltd. 2005 (179) ELT 276 wherein it has been held that when MODVAT credit wrongly availed is exactly equivalent to the excise duty paid, the consequences is revenue neutral and hence demand for such wrong a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/28/2002-Cx dated 08/05/2002 and judgment of the Hon'ble High Court of Bombay in the case of Coca Cola India Pvt. Ltd. vs. Commissioner of Central Excise, Pune - III 2009 (242) ELT 168. 5. We have carefully considered the submissions made by both the sides. 6. There is no dispute about the fact that the bought out parts have been exported on payment of duty under claim for rebate and the jurisdictional Assistant Commissioner has also passed the claim for rebate vide his order dated 29/11/2007 holding that the bought out parts form part of the complete machinery. In the appellant's own case, referred to supra, it was held that even though the goods were cleared in piecemeal the goods were classifiable as rolling mills and galvanising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved was bought out items cleared as spares over and above the ones used in the manufacture of transformers for taking care of any unforeseen break down of transformer at customer's end. Although no manufacturing activity was involved in such goods, the Tribunal came to the conclusion that the activity carried in such spares involves only repacking and does not amount to manufacture. It was further held that, if duty has been paid at the time of clearance of the spares, it should be treated as reversal of alleged ineligible MODVAT credit. The ratio of this judgment supports the case of the appellant and not that of the department in this case. The appellant has cleared the goods on payment of duty and therefore whatever credit they ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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