2009 (12) TMI 968 - AT - Central Excise

Summary

Issues involved:
The appeal involves the question of whether Cenvat credit can be allowed on inputs used in the manufacture of exempted goods for export under LUT, and the applicability of Rule 6(1) of the Cenvat Credit Rules, 2004.

Summary:

Issue 1: Applicability of Cenvat Credit Rules on export of exempted goods
The appeal concerns the Revenue's contention that Cenvat credit should not be allowed on inputs used in the manufacture of exempted goods for export. The Revenue argued that Rule 6(1) of the Cenvat Credit Rules, 2004 should apply, citing relevant case law and circulars. The appellate authority had previously allowed the appeal of the respondent, who manufactures tractors falling under an exemption notification. The Revenue challenged this decision.

Issue 2: Interpretation of Rule 6(6)(v) of Cenvat Credit Rules, 2004
The respondent argued that Cenvat credit should be allowed on inputs of exempted goods cleared for export, relying on Rule 6(6)(v) of the Cenvat Credit Rules, 2004. The respondent contended that the objective is to promote exports and ensure competitiveness in the international market. The respondent cited relevant case law to support their position, including decisions by the Bombay High Court and the Tribunal.

Judgment:
The Tribunal, after considering the arguments of both parties, upheld the decision of the appellate authority in favor of the respondent. The Tribunal found that the issue was covered by the decision in the case of Repro India Ltd., which emphasized the objective of not levying duty on inputs going to export products. The Tribunal highlighted the importance of Rule 6(6)(v) in ensuring that duty is not levied on inputs for export goods. Therefore, the appeal filed by the Revenue was rejected, and the decision in favor of the respondent was upheld.