Excise & Customs : Where assessee had taken credit of additional duties of customs and had re-exported goods on which credit had been taken : (a) Cenvat Credit taken earlier was reversible and (b) duty drawback of said duties could not be allowed when Cenvat Credit had been reversed after more than 5 years from re-export and more than 3 years from department pointing out erroneous Cenvat Credit
■■■
[2014] 48 taxmann.com 372 (Delhi)
HIGH COURT OF DELHI
Vishal Beverages (P.) Ltd.
v.
Union of India*
S. RAVINDRA BHAT AND VIBHU BAKHRU, JJ.
W.P. (C) NO. 136 OF 2014
C.M. NO. 247 OF 2014
AUGUST 4, 2014
Rule 3 of the Cenvat Credit Rules, 2004 - CENVAT Credit - Removal of Inputs/Capital goods - Assessee imported machinery for temporary use on rental basis and took credit of additional customs duty and special additional customs duty paid at time of import - When said goods were re-exported, assessee did not make any reversal under rule 3(5) - HELD : Since goods were meant for temporary use, credit taken was erroneous and was liable to be reversed under rule 3(5) - Hence, credit was reversible along with interest and penalty [Paras 18 to 20] [In favour of revenue]
Article 226 of the Constitution of India - Writ petition - Maintainability of - It is a settled principle that a party seeking relief must come to Court with clean hands [Para 20] [In favour of revenue]
Section 74 of the Customs Act, 1962 read with rules 4, 5 and 7A of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 - Drawback - On re-export of duty paid goods - Assessee imported a machinery on temporary basis for re-exporter and paid duties at time of import in 2007 - Assessee re-exported machinery within about 3 months and claimed drawback of BCD portion and Cenvat Credit of additional duties of customs - On audit in 2009, department pointed out that Cenvat Credit was inadmissible as per rule 3(5) of CENVAT Credit Rules, 2004, as goods had been removed - In 2009 itself, assessee applied for claim of drawback along with application of relaxation under rule 7A ibid - Assessee reversed Cenvat Credit along with interest and penalty in May 2012 after issuance of show-cause notice by Department - Central Government denied relaxation on ground that assessee had not shown circumstances beyond its control and assessee had also acted mala fide - Assessee filed writ petition seeking relied - HELD : While awaiting decision on time relaxation, assessee continued to profit from wrongly utilized CENVAT credit till May 2012 clearly in contravention of rule 3(5) of CENVAT Credit Rules - Assessee cannot be allowed a drawback on Excise duty as that would tantamount to allowing it to profit from its unjustly derived benefit of CENVAT credit till May 2012 - Thus, assessee cannot be granted relief as its claim to relief is not made with clean hands [Para 20] [In favour of revenue]
■■■
[2014] 48 taxmann.com 372 (Delhi)
HIGH COURT OF DELHI
Vishal Beverages (P.) Ltd.
v.
Union of India*
S. RAVINDRA BHAT AND VIBHU BAKHRU, JJ.
W.P. (C) NO. 136 OF 2014
C.M. NO. 247 OF 2014
AUGUST 4, 2014
Rule 3 of the Cenvat Credit Rules, 2004 - CENVAT Credit - Removal of Inputs/Capital goods - Assessee imported machinery for temporary use on rental basis and took credit of additional customs duty and special additional customs duty paid at time of import - When said goods were re-exported, assessee did not make any reversal under rule 3(5) - HELD : Since goods were meant for temporary use, credit taken was erroneous and was liable to be reversed under rule 3(5) - Hence, credit was reversible along with interest and penalty [Paras 18 to 20] [In favour of revenue]
Article 226 of the Constitution of India - Writ petition - Maintainability of - It is a settled principle that a party seeking relief must come to Court with clean hands [Para 20] [In favour of revenue]
Section 74 of the Customs Act, 1962 read with rules 4, 5 and 7A of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 - Drawback - On re-export of duty paid goods - Assessee imported a machinery on temporary basis for re-exporter and paid duties at time of import in 2007 - Assessee re-exported machinery within about 3 months and claimed drawback of BCD portion and Cenvat Credit of additional duties of customs - On audit in 2009, department pointed out that Cenvat Credit was inadmissible as per rule 3(5) of CENVAT Credit Rules, 2004, as goods had been removed - In 2009 itself, assessee applied for claim of drawback along with application of relaxation under rule 7A ibid - Assessee reversed Cenvat Credit along with interest and penalty in May 2012 after issuance of show-cause notice by Department - Central Government denied relaxation on ground that assessee had not shown circumstances beyond its control and assessee had also acted mala fide - Assessee filed writ petition seeking relied - HELD : While awaiting decision on time relaxation, assessee continued to profit from wrongly utilized CENVAT credit till May 2012 clearly in contravention of rule 3(5) of CENVAT Credit Rules - Assessee cannot be allowed a drawback on Excise duty as that would tantamount to allowing it to profit from its unjustly derived benefit of CENVAT credit till May 2012 - Thus, assessee cannot be granted relief as its claim to relief is not made with clean hands [Para 20] [In favour of revenue]
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