TMI Blog2015 (9) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... on amounts to non-taking of credit that such reversal can be done subsequent to export of goods In present case applicant made proportionate reversal of Cenvat credit before utilization of same There are no substantial material evidences to support allegation of mala fide intention on part of applicant Since, applicant has reversed proportionate Cenvat credit availed on input services when dispute arose and claimed that said amount was not utilized and remained in balance, so this reversal has also to be treated as non-availment of Cenvat credit on input services Therefore applicant entitled for drawback claims at higher rate @ 14.88% Impugned Order set aside and revision application allowed Decided in favour of Assesse. - F. No. 371/79/DBK/13-RA - Order No. 168/2014-Cus. - Dated:- 12-12-2014 - Smt. Archana Pandey Tiwari, Joint Secretary Shri G.L. Deshpande, Advocate, for the Assessee. Shri M.G. Khare, Superintendent, for the Department. ORDER This revision application is filed by M/s. Pee Vee Textiles, Wardha, Maharashtra against the Order-in-Appeal No. NGP-EXCUS-000-APPI-740/13-14, dated 5-8-2013 passed by the Commissioner (Appeals), Customs, Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of non-compliance of his previous order of pre-deposit. 3.1 Being aggrieved by the impugned Order-in-Appeal, the applicant has filed the revision application No. 371/42/DBK/12-RA before Joint Secretary (Revision Application). The JS (RA) vide Revision Order No. 147/13-Cus., dated 3-6-2013 reduced the quantum of pre-deposit to 25% of drawback amount demanded and decide the appeal on merits after carrying out necessary verification as directed in para (9.1) of the said revision order dated 3-6-2013. 3.2 In remand proceedings, Commissioner (Appeals) rejected the appeal filed by the applicant, without carrying out any verification as directed by the JS (RA). 4. Being aggrieved by the impugned Order-in-Appeal, the applicant filed this revision application under Section 129DD of the Customs Act, 1962 before Government on following grounds : 4.1 The Commissioner (Appeals) has not followed the direction of remand order passed by this Hon ble authority in its letter and spirit. The Commissioner (Appeals) totally ignored, for reasons best known to him, the observation in para 9.1 of the order of this Hon ble Authority which is to the effect that the claim of the applicant of havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or less reproduction of the statutory provisions, does not make the impugned order a legal order unless the contention actually raised by the applicant in the remanded proceedings, was examined in the context of the order of this Hon ble Authority by causing verification of the factual position vis- -vis the claim made and giving findings thereon. 4.5 The Commissioner (Appeals) also lost sight of more significant fact that the input service credit of ₹ 5,74,360/- which was availed by the applicant was attributable to the input services received during the period April, 2007 to September, 2007 and the credit was availed in one stroke in September 2007, by which time the manufacture of the disputed goods exported under claim of full rate of drawback had not even started. The applicant submits that the input services on which credit was availed, were consumed in relation to manufacture and transportation of the excisable goods manufactured during the period April, 2007 to September, 2007. 5. The applicant further in their written submission vide letter dated 30-9-2014 mainly stated as under : 5.1 The applicant was entitled to total Cenvat credit of ₹ 9,16,539/- o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise, Nagpur, attended the hearing. 7. Government has carefully gone through the relevant case records and perused the impugned Order-in-Original and Order-in-Appeal. 8. Government observes that the applicants were initially sanctioned drawback @ 14.8% on the declaration that they have not availed the Cenvat credit. Subsequently, it was observed that the applicant had availed Cenvat credit in respect of input services and hence, condition of non-availment of Cenvat credit has not been fulfilled. As such recovery proceeding for erroneously sanctioned drawback were initiated and the original authority vide impugned Order-in-Original confirmed the demand of already sanctioned drawback. Commissioner (Appeals) rejected the applicant s appeal for non-compliance of his direction of pre-deposit of amount demanded in impugned Order-in-Original along with applicable interest. 8.1 Being aggrieved by the impugned Order-in-Appeal, the applicant has filed the revision application No. 371/42/DBK/12-RA before Joint Secretary (Revision Application). The JS (RA) vide Revision Order No. 147/13-Cus., dated 3-6-2013 reduced the quantum of pre-deposit to 25% of drawback amount demanded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acility has not been availed . The appellate authority further observed that first proviso of Rule 3(i) specifies that if any tax/duty paid has been given as credit then the drawback admissible on the said goods shall be reduced accordingly, by taking into account the credit obtained and also the difference between AIR under heading when Cenvat facility has not been availed and when Cenvat facility has been availed refers to Central Excise and Service Tax component of drawback and from harmonous reading of Rule 3(1) and provision of the Notification No. 68/2007-Cus. (N.T.), it can be logically held that if the Cenvat credit of Service Tax has been availed then higher rate of drawback is not admissible. The applicant has stated that these observations of appellate authority are misplaced interpretation and Notification No. 68/2007-Cus. (N.T.) clearly provides that the condition of availment of higher rate of drawback is non-availment of Cenvat credit on inputs and not non-availment of Cenvat credit on input services . The said condition was inserted in Notification No. 103/2008-Cus. (N.T.), dated 29-8-2008 and therefore, it cannot be made applicable to export made during Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t services explicitly but it does not mean it was not included in the wordings of earlier Notification No. 68/2007-Cus. (N.T.) as discussed above. Under such circumstances, Government finds it logical to conclude that condition of non availment of Cenvat credit on inputs includes non availment of Cenvat credit on input services also. The inclusion of wording input services in the Notification No. 103/2008-Cus. (N.T.) merely explicitly clarify the position, which was otherwise, implicitly present in the Notification No. 68/2007-Cus. (N.T.), dated 16-7-2007. 12. Government observes that it is a fact on record that the applicant availed credit of only ₹ 5,74,360/- on account of Service Tax paid by them during relevant period. The drawback claims sought to be reduced @ 3% instead of 14.8% @ as claimed by the applicant on the ground that the applicant availed Cenvat credit on input services. This Contention of department was culmination of audit objection made vide letter dated 23-7-2010 of the Assistant Audit Officer/CERA-I. In this objection, it has been observed, that the applicant availed Cenvat credit in respect of common input services such as construction services, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wires Ltd., the Hon ble Supreme Court has held that on reversal of Modvat credit before utilization, the assessee cannot be said to have taken credit of duty on inputs utilized in the manufacture of exported final product. This judgment clearly spells in unambiguous terms that reversal of Modvat amounts to non-availment of Modvat. (b) Hon ble Gujarat High Court in case of CCE v. Ashima Dyecot Ltd., relying upon above judgments in case of Chandrapur Magnet Wires (P) Ltd. and Hello Mineral Waters Pvt. Ltd. has held that reversal of credit amounts to non-availment of credit. This order of Hon ble High Court has further been affirmed by the Hon ble Supreme Court. (c) In the case of CCE, Mumbai v. Bombay Dyeing Manufacturing Co. Ltd. Hon ble Supreme Court has held that, the assessee got credit which was never utilized and before removal of goods, they reversed the same, which amounts to not taking credit. (d) In case of CC v. Diplast Plastics Ltd., Hon ble Punjab and Haryana High Court has held that the contention of department that assessee has reversed Cenvat credit after detection by the department and hence they are not eligible for exemption is devoid of merit ..... 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