Relief to Ashok Leyland: CESTAT Set Asides Reversal of CENVAT Credit of Excise Duty on Export of Chassis on ground of Non-violation of Rule 16 of Central Excise Rules [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to the Ashok Leyland by quashing the reversal of CENVAT credit of excise duty on export of chassis on the ground of non-violation of Rule 16 and of Central Excise Rules, 2002. 

Ashok Leyland Limited, the appellant assessee was engaged in the manufacture of various types of motor vehicles fitted with engines and parts thereof falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 and the chassis manufactured are sold by the assessee to customers either through their regional sales depots located at various places or by direct sales from the factory gate. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of CENVAT credit that was wrongly availed which was not reversed by the assessee when the chassis was exported and cleared along with interest and for imposing penalties. 

M Kannan, the counsel for the assessee contended that as per the provisions of the CENVAT Credit Rules, the credit availed was eligible; the Department cannot deny the credit alleging that the credit had been wrongly availed in terms of Rule 16 of the Central Excise Rules. 

Harendra Singh Pal, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was wrongly availed the credit and liable to be reversed. 

The Bench observed that the goods after repair had been exported or cleared under exemption Notification No. 108/1995-C.E and the clearance of the chassis was as per the law and entitled to the excise duty exemption. 

The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) quashed the reversal of CENVAT credit while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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