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2016 (3) TMI 439 - CESTAT CHENNAI

2016 (3) TMI 439 - CESTAT CHENNAI - 2016 (337) E.L.T. 583 (Tri. - Chennai) - Reversal of CENVAT credit - whether the appellant while clearing the imported inputs which were found to be defective and unusable and later re-exported from their premises, is required to pay an amount equal to the credit availed on such inputs as per Rule 3(5) of the Cenvat Credit Rules, 2004 - Held that:- In the instant case, the imported inputs were directly used and found to be defective and not upto the appellant' .....

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of assessee - E/42061 -42062/2014 - Final Order No.: 40441-40442 / 2016 - Dated:- 11-3-2016 - SHRI P. K. CHOUDHARY, JUDICIAL MEMBER For the Petitioner : Shri S. Karthik , Advocate For the Respondent : Ms. Indira Sisupal, AC (AR) ORDER Since both the appeals are arising out of the common Order-in-Appeal, both are taken up together for disposal. 2. M/s. MRF Ltd., the appellant company is primarily engaged in the manufacture of Radial Tyres for passenger cars and trucks falling under Chapter 40 of .....

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it of CVD to the tune of ₹ 7,73,306/-. In the process of production it was found that the imported material had a defect and the appellant decided not to use the said steel tyre cord as inputs any further. By this time, 9336 kgs. of imported steel tyre cord was already consumed in the production process and the appellant decided to re-export the balance of 25478 kgs. to the supplier vide ARE-1 No. 0001 dated 27.07.2009. The department issued show cause notice alleging that the appellant as .....

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erest and also imposed equal penalty. Being aggrieved, the appellant assessee preferred appeal before the Ld. Commissioner (Appeals), who rejected their appeal and upheld the Order-in-Original. Being aggrieved by the impugned order dated 12.06.2014, the appellant company is in appeal before this Tribunal. Appeal No. E/42062/2014 4. The appellant assessee had imported X-ray Tube MCT-120-SN-9679 (hereinafter referred to X-ray Tube) vide Bill of Entry No. 5292786 dated 25.11.2011 from France and .....

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6/11-12 dated 08.02.2012. The appellant assessee informed the department that the malfunctioning of x-ray tubes imported from France was being re-exported to the supplier and credit was not reversed while re-exporting the same as per Rule 19 of the Central Excise Rules, 2002. Show cause notice was issued alleging that the appellant assessee had contravened the provisions under Rule 3 (5) read with Rule 14 of CENVAT Credit Rules, 2004, and demanded an amount of ₹ 2,50,750/- and proposed to .....

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d that the present dispute is as to whether the appellant while clearing the imported inputs which were found to be defective and unusable and later re-exported from their premises, is required to pay an amount equal to the credit availed on such inputs as per Rule 3(5) of the Cenvat Credit Rules, 2004. The Commissioner (Appeals) has observed that the credit taken on the impugned defective imported inputs / capital goods are recoverable under Rule 3 (5) of the Cenvat Credit Rules at the time of .....

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se Manual of CBEC s instructions would not apply to the facts of the present case as Rule 5 does not apply to inputs exported as such; that reliance placed on the Tribunals rulings in the case of Zydex Industries Vs CCE reported in 2007 (219) ELT 602 (Tri-Ahmd); RFH Metal Castings P Ltd vs CCE, Jaipur reported in 2005 (184) ELT 194 (Tri-Del) and the clarification issued by the Board is inapplicable as the applicability of the said circulars in the context of the present legal position was not d .....

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n the Boards circular No.283/117/96 dated 31.12.1996 it has been clearly stated that the credit availed on inputs which are re-exported as such under Bond need not be reversed. The relevant portion of the said circular is culled out below: 5. Accordingly, it is clarified that the Modvat credit in RG23A Part-II account against the export of inputs as such under bond can be utilized in the same manner as it is provided for a final product under proviso to Rule 57F(4). Obviously, it follows from t .....

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