2016 (9) TMI 1355 - HC - Central Excise

Refund of CENVAT credit - exempted goods - Held that - judgment in the case of Commissioner of Central Excise v. Drish Shoes Ltd. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT is confirmed by the Apex Court involving similar issue no substantial question of law arises in the present appeals where it was held that According to Rule 5 of CENVAT Credit Rules 2004 that a manufacturer who exports the final products which are exempt from duty can claim refund of CENVAT - appeal dismissed - decided against Revenue.

Issues involved:
1. Entitlement to Cenvat credit on exempted goods
2. Interpretation of Rule 6(1) of the Cenvat Credit Rules, 2004
3. Applicability of Rule 18 of the Central Excise Rules, 2002
4. Monetary limit for entertaining appeals
5. Consideration of judgment in Commissioner of Central Excise v. Drish Shoes Ltd.
6. Scope of Cenvat credit on inputs of exempted goods
7. Availability of Cenvat credit for exported exempted goods
8. Interpretation of the term "excisable goods"
9. Confirmation of judgment by the Apex Court
10. Existence of substantial questions of law

Analysis:

1. The main issue in this case revolves around the entitlement of the respondent assessee to claim Cenvat credit on exempted goods. The appellant contends that the assessee is not eligible for Cenvat credit on inputs or input services of exempted goods, citing Rule 6(1) of the Cenvat Credit Rules, 2004. The Tribunal's decision to allow the refund of Cenvat credit is challenged as not in line with statutory provisions.

2. The appellant relies on the interpretation of Rule 6(1) of the Cenvat Credit Rules, 2004, arguing that since the assessee exclusively deals with exempted goods, they are not entitled to claim Cenvat credit on duty paid inputs and input services. The appellant asserts that Cenvat credit is only permissible for dutiable final products, as mandated by Rule 3 of the Cenvat Credit Rules, 2004.

3. Additionally, the appellant highlights the non-consideration of Rule 18 of the Central Excise Rules, 2002 by the Tribunal, emphasizing procedural lapses in the decision-making process.

4. The respondent contends that appeals involving monetary value up to a certain limit need not be entertained, and references the judgment in Commissioner of Central Excise v. Drish Shoes Ltd. to support their argument that Cenvat credit should be available for inputs of exempted goods.

5. The High Court's analysis delves into the interpretation of the term "excisable goods" in the context of Cenvat credit rules, citing precedents like Repro India Ltd. v. Union of India. The court ultimately holds that an assessee manufacturing goods chargeable to nil duty can avail Cenvat credit under specific exceptions.

6. The judgment clarifies that a manufacturer exporting final products exempt from duty can claim a refund of Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004, further supporting the respondent's position.

7. The court dismisses the appeals, emphasizing that no substantial questions of law arise due to the confirmation of the judgment in Commissioner of Central Excise v. Drish Shoes Ltd. by the Apex Court, leading to the rejection of the appeals.

8. The interpretation of the term "excisable goods" is pivotal in determining the eligibility for Cenvat credit, as established by previous court decisions and the specific provisions of the Cenvat Credit Rules.

9. The confirmation of the judgment by the Apex Court reinforces the validity of the interpretation provided by the High Court, strengthening the respondent's position in claiming Cenvat credit on exempted goods.

10. Ultimately, the absence of substantial legal questions arising from the confirmed judgment leads to the dismissal of the appeals, with no costs imposed, effectively concluding the legal proceedings in this matter.

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