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M/s Vapi Pigments Chemicals & Allied Products Versus Commissioner, C. Ex. & S. Tax, Daman

2016 (8) TMI 294 - CESTAT AHMEDABAD

Cenvat credit - eligibility - duty paid inputs procured indigenously and used in the manufacture of finished goods by the loan licence - export of goods by the principal manufacturer, against DFIA - trade notice issued by the DGFT bearing No.02/AM 07 dt.02.02.2007 - withdrawal of restriction on availing cenvat credit under FTP - whether in the nature of retrospective or prospective - Held that:- it is found from the impugned order of the learned Commissioner (Appeals) that at the time of passing .....

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lso the retrospective amendment to the notification and provisions of Foreign Trade Policy, while deciding the issue afresh on merit. - Appeal allowed by way of remand - Appeal No. E/1369/2008-DB; E/Others/10299/2016 - Dated:- 5-8-2016 - Dr. D.M. Misra, Member (Judicial) And Mr. P.M. Saleem, Member (Technical) For the Appellant : Shri Anand Nainawati, Advocate For the Respondent : Shri S.K. Shukla, Shri L. Patra, A.Rs. ORDER Per Dr. D.M. Misra This Appeal has been filed against OIA No.KKS/279/Da .....

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e Chrome Pigments in accordance with Foreign Trade Policy 2004-2009 meant for export. On scrutiny of ER-1 returns for the months of May 2006 to February, 2007, it was alleged that the Appellant during the said period had wrongly availed CENVAT Credit amounting to ₹ 45,73,230.00 which was not admissible to them in terms of Para 4.4.7 of Foreign Trade Policy(2004-09) and Notification No.40/2006-Cus, dt.01.05.2006. Consequently, the demand notice was issued to the Appellant on 24.07.2007, pro .....

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and hence unsustainable in law. He has submitted that the learned Commissioner (Appeals) has simply accepted the trade notice issued by the DGFT bearing No.02/AM 07 dt.02.02.2007 even though its operation was subsequently kept in abeyance by another trade notice No.3/AM 07, dt.07.02.2007 issued by DGFT. It is the sole ground on which the learned Commissioner (Appeals) has rejected their appeal observing that since the earlier trade notice was not withdrawn, therefore, it was valid. He has submit .....

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ubmission that another basis on which the Show Cause Notice was issued, namely, violation of Condition (v) of Notification No.40/2006-Cus, dt.01.05.2006 in as much as Credit under CENVAT Credit Rules in respect of materials imported/procured against the said authorization could not be availed, so as to become eligible to avail the benefit of said notification, is no more sustainable in law. It is contention that the said condition has been retrospectively amended w.e.f. 01.05.2006 vide Clause No .....

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and used in the manufacture of finished goods meant to be cleared ultimately by the principal manufacturer against DFIA scheme, could be denied. Therefore, recovery of CENVAT Credit is bad in law. He has also submitted that in their reply to the Show Cause Notice, and in the grounds of Appeal before the Ld. Commisioner(Appeals), they have categorically rebutted the allegation of availment CENVAT Credit on any of the imported or indigenously procured inputs/raw material against the Duty Free Impo .....

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the trade notices issued by DGFT. 5. Heard both sides and perused the records. The short point which needs to be addressed is: whether the Appellant, a loan licensee is eligible to avail CENVAT Credit on the duty paid inputs procured indigenously and used in the manufacture of finished goods meant to be exported by the principal manufacturer, against DFIA. 6. The Revenue proposed to deny the CENVAT Credit referring to Para 4.4.7 of Foreign Trade Policy (2004-2009), and the Condition (v) of exem .....

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d by the Regional Authority by exporting resultant products, manufactured in India which are specified in the said authorization and in respect of which facility under Rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of Rule 19 of the Central Excise Rules, 2002 or CENVAT Credit under CENVAT Credit Rules, 2004 in respect of materials imported/procured against the said authorization has not been availed. 7. The principal argument of the Appell .....

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ts, manufactured in India which are specified in the said authorization: Provided that an Advance Intermediate authorization holder shall discharge export obligation by supplying the resultant products to the exporter in terms of Paragraph 4.1.3 (ii) of the Foreign Trade Policy. 7. It is also argued that the relevant Para 4.4.7 of Foreign Trade Policy(2004-09) has been amended w.e.f. 19.04.2007 removing the restriction of non-availment of CENVAT Credit. We find from the impugned order of the lea .....

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