2010 (6) TMI 702 - AT - Central Excise

Refund claim - exports under bond - denial on the ground that the assessee was in a position to utilize the credit in respect of the goods cleared for export under rebate - Held that - No manufacturer can be compelled to clear the exports under rebate and they are free to make their own choice out of various options given to them under the law - Revenue s contention that the party has failed to provide evidence that they were not able to utilize the Cenvat credit for payment of duty in case of exports under rebate, cannot be accepted inasmuch as wherever the respondents have exported goods under rebate, they have utilized the credit - refund allowed - appeal rejected - decided against Revenue.

Summary

Issues:
- Dispute over refund claims of Modvat credit for exports under bond.
- Rejection of refund claims by original adjudicating authority.
- Commissioner (Appeals) ruling in favor of the assessee.
- Revenue's appeal against Commissioner (Appeals) decision.

Analysis:
The case involved a dispute regarding the refund claims of Modvat credit for exports under bond and rebate. The respondents exported final products under bond and rebate, utilizing Modvat credit for duty payment on goods exported under rebate. The original adjudicating authority rejected the refund claims, stating that the assessee could utilize the credit for goods cleared under rebate. However, the Commissioner (Appeals) ruled in favor of the assessee, leading to the Revenue filing the present appeals.

The Commissioner (Appeals) noted that the appellant had exported goods under rebate during the relevant period, indicating credit utilization for duty payment. The appellate authority rightly observed that manufacturers cannot be compelled to export under rebate, entitling exports under bond to a refund of input credit. The Revenue contended that evidence of inability to use Cenvat credit for duty payment under rebate was lacking, but the respondents had indeed utilized the credit for such exports. Manufacturers have the freedom to choose between exporting under bond or rebate, and the law does not mandate exports under rebate. Therefore, the Commissioner's decision was upheld, rejecting the Revenue's appeals and disposing of the stay petition.

In conclusion, the judgment clarified that manufacturers have the discretion to choose between exporting under bond or rebate, and the decision to export under bond does not disqualify them from refund claims of input credit. The ruling emphasized the freedom of choice for manufacturers and upheld the Commissioner (Appeals) decision in favor of the assessee, dismissing the Revenue's appeals.