2009 (6) TMI 804 - AT - Central Excise

Summary

Issues involved:
The main issue in this case is whether refund of surplus credit is admissible under Rule 5 of the Cenvat Credit Rules to a manufacturer who is not a direct exporter of the goods.

Comprehensive Details:

Facts and Background:
The appellants are involved in the manufacture of processed textile fabrics using grey textile fabric as their main raw material. They availed cenvat credit of duty paid on inputs used in the manufacture of processed fabrics. The processed fabrics were supplied without payment of duty to various entities for the manufacture of readymade garments for export, under Notification No. 43/2001-C.E. (N.T.). The appellant sought refund of the Cenvat credit of duty on inputs used in the manufacture of processed fabrics which were cleared for export without payment of duty.

Appellant's Argument:
The appellant contended that as per Rule 5 of the Cenvat Credit Rules 2002, they were eligible for cash refund of the unutilized credit since the processed fabrics were used as intermediate products by garment manufacturers for export, without claiming drawback or input duty rebate. Citing relevant judgments, the appellant argued that they met the conditions for refund under Rule 5.

Respondent's Defense:
The learned DR defended the impugned order and cited a Tribunal judgment in support of the Commissioner (Appeals)'s decision.

Judgment:
After considering the submissions from both sides, the Tribunal referred to previous decisions in similar cases. It noted that the issue of refund of surplus credit to a manufacturer not directly exporting goods was addressed in previous judgments. The Tribunal found that the appellant met the criteria for refund under Rule 5 of the Cenvat Credit Rules, as the exports were not made under drawback or rebate claims. Relying on precedent, the Tribunal held that the impugned order was not sustainable and set it aside, allowing the appeals.

Conclusion:
The Tribunal ruled in favor of the appellant, allowing the refund of surplus credit under Rule 5 of the Cenvat Credit Rules, as the conditions for refund were met based on the nature of exports and utilization of inputs in the manufacturing process.