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2007 (12) TMI 110 - AT - Central ExciseManufacture of acrylic mink blankets waste arise during mfg. of goods to be exported credit of inputs contained on waste is refundable or not - refund is admissible in respect of inputs used in the manufacture of final product which are cleared for export- no dispute regarding the use of inputs in the manufacture of final products which was cleared for export - no prohibition under the Rules for claiming refund in respect of credit on inputs contained in the waste revenue appeal dismissed
Issues:
Refund claim under Rule 5 of Cenvat Credit Rules, 2002 for unutilized credit on raw material used in the manufacture of imported goods. Analysis: The respondents, engaged in manufacturing acrylic mink blankets, filed a refund claim under Rule 5 of the Cenvat Credit Rules, 2002, for unutilized credit on raw material used in the manufacture of imported goods. The show cause notice was issued for rejection of part of the refund claim, specifically on account of wastage content of fabric/yarn and other inputs contained in the waste. The adjudicating authority allowed a major portion of the refund but rejected a specific amount. The respondents appealed, and the Commissioner (Appeals) allowed the appeals, leading to the current proceedings. The main contention of the revenue was that the respondents are not entitled to a refund for the duty paid on inputs containing waste, as they cleared a certain quantity of waste. However, Rule 5 of the Cenvat Credit Rules allows for a refund of the amount in such cases, subject to specified conditions and limitations. The rule states that the refund is admissible for inputs used in the manufacture of final products cleared for export, without any prohibition on claiming refund for credit on inputs contained in waste generated during manufacturing. The Tribunal found that there was no dispute regarding the use of inputs in the manufacture of final products cleared for export. Since the rules do not prohibit claiming a refund for inputs attributable to waste generated during manufacturing, the credit is admissible under Rule 5. Therefore, the Tribunal dismissed the appeals, as there was no ground to deny the refund of credit in this case. In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the appeals, emphasizing that the refund of credit for inputs used in the manufacture of final products cleared for export, including those attributable to waste, is permissible under Rule 5 of the Cenvat Credit Rules.
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