2006 (2) TMI 356 - AT - Central Excise

Summary

Issues:
Refund of Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2002 for export of goods cleared under ARE 1s and ARE 2s.

Analysis:
1. The appellants, engaged in manufacturing cotton fabrics, cleared goods without duty payment under ARE 3s to manufacturer-exporters and merchant-exporters. Manufacturer-exporters converted fabrics into 'made-ups' cleared under ARE 2s, while merchant-exporters cleared fabrics under ARE 1s for export. Appellants claimed refund of Cenvat credit on yarn used in fabric manufacture but faced rejection by the original authority due to lack of proof of export. The first appellate authority remanded the claim related to ARE 1s and disallowed the claim for 'made-ups' under ARE 2s, leading to the present appeals.

2. The original authority rejected refund claims based on lack of conclusive proof of export. The Commissioner (Appeals) emphasized that Rule 5 of Cenvat Credit Rules, 2002 allows refunds for products cleared for export from the manufacturer's premises. The appeals tribunal noted discrepancies in the original authority's reasoning, emphasizing the necessity of goods being cleared from the manufacturer's premises for refund eligibility under Rule 5.

3. The appellants argued that export goods need not be cleared from the manufacturer's premises for Cenvat credit refund, citing a precedent. The Jt. CDR referenced specific notifications and rules requiring export goods to be removed from the manufacturer's factory for Cenvat credit refund under Rule 5. The tribunal considered these arguments and legal provisions in detail.

4. The tribunal analyzed a precedent involving a similar refund claim scenario, emphasizing the importance of export goods being ultimately exported, regardless of the clearance location. Drawing parallels with the precedent, the tribunal found no merit in the Revenue's appeal, rejecting the notion that goods must be removed from the appellants' premises for refund eligibility under Rule 5. The tribunal's decision highlighted the consistency of rules across cases and the applicability of the precedent's ratio to the present case, ultimately setting aside the impugned order and allowing the appeals.

5. The tribunal concluded by setting aside the impugned order and allowing the appeals, emphasizing the consistent application of legal principles and precedents in determining refund eligibility under Rule 5 of the Cenvat Credit Rules, 2002.

(Order pronounced in open court on 13-2-2006)