Whether denial of credit on packing material on the ground that the exported material is duty-free proper?

PJ/Case Law/2013-14/1665

Case:-MADUTA COATS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MADURAI

Citation:-2013(293) E.L.T. 371 (Tri.-Chennai)

Brief Facts:-The amount involved in this case is only Rs. 19,713/-. On the one hand, appellants have filed an application for early hearing of the appeal and on the other, they have sought for adjournment on the ground that their authorized representative based in Mumbai has to come for arguing the appeal, through the same involves a petty amount of Rs. 19,713/-

As the issue lies in a short compass, the appeal can be heard and disposed of today itself. Hence, the adjournment request is declined, the requirement of pre-deposit is waived and the miscellaneous application for early hearing is allowed and the appeal is taken up for hearing and disposal.
Appellant Contentions:-Appellant is submitted that they have claimed input duty credit in respect of packing material which has been denied by the department on the ground that the exported material is otherwise duty-free is not justifiable.

Respondent Contentions:-The respondent submitted that the appellant have taken input credit on packing material is not valid.

Reasoning of Judgment:-We have considered the submission from both the parties and perused the record, we find that the appellants have exported ‘Multi Folded Cotton Yarn’ on payment of duty. They have claimed input duty credit in respect of packing material which has been denied by the department on the ground that the exported material is otherwise duty –free. It is the undisputed policy of the Government not to burden the export goods with domestic taxes as has been noted in various decisions of the Tribunal. The reasons are obvious. We do not want to make domestically produced goods, when exported to foreign market, to become uncompetitive. Secondly, no country wants to export the domestic taxes meant to be levied on domestic consumption of goods and services. Each country either exempts such taxes in respect of export goods. Including taxes relating to inputs used in the export goods, or there are alternative schemes for providing rebate, drawback of duties suffered by export goods. India is no exception as we also have similar schemes. There are also schemes making available duty-free goods and services for export production.

As such, allowing of input duty credit would free the export goods from domestic taxes. Hence, the impugned order is set aside and the appeal is allowed. Stay petition also gests disposed of.
Decision:-Appeal is allowed.
Comment:-The essence of this case is that the ultimate intention of the government is not to burden the exported goods with domestic taxes and it is also not hidden that there are various incentive schemes granting rebate/refund of input stage duties and accordingly, denial of credit on packing material would defeat the very purpose of promoting exports and so the appeal is allowed as far as goods are exported.

Comments

PJ/Case Law/2013-14/1665

Post a Comment

Query