2011 (10) TMI 189 - AT - Central Excise

Admissibility of Credit on Input - Refund of accumulated credit - 100% EOU converted into DTA - refund claim rejected on the ground that finished product Peanut Butter was totally exempted from of duty - Held - when the duty was paid on input, the appellant was still a 100% EOU and because it was 100% EOU, the appellant was eligible for CENVAT Credit if duty was paid on packing material, input etc. Computation of period of limitation of one year - held that - period of 1 year for the purpose of limitation under Section 11B of Central Excise Act, 1944 has to be counted from the date on which final conclusion is reached that the credit cannot be utilized. Condition of export under bond - Held that - A 100% EOU has to export the goods under bond only, since if it is cleared to DTA unit, Peanut Butter attracted duty. - the condition that the goods should have been exported under bond is fulfilled. - Refund allowed.

Summary

Issues involved:
1. Eligibility for CENVAT Credit on duty paid at the time of de-bonding.
2. Rejection of refund claims for unutilized CENVAT Credit.
3. Applicability of Rule 6 of CENVAT Credit Rules.
4. Justification for refund claims based on duty payment and utilization of CENVAT Credit.
5. Interpretation of limitation period for refund claims.
6. Requirement of exporting goods under bond for refund eligibility.

Analysis:
1. The appellant, a 100% EOU manufacturing Peanut Butter, sought a No Dues Certificate for de-bonding to become a DTA unit. The appellant's refund claim of Rs.1,73,322/- under Rule 5 of CENVAT Credit Rules was rejected due to the product's total duty exemption. However, the Tribunal found the appellant eligible for CENVAT Credit as the duty was paid before becoming a DTA unit, allowing the refund claim.

2. Two additional refund claims were made, both rejected by the authorities. The first claim was dismissed due to limitation, while the second claim was rejected on the premise that the appellant could have utilized the CENVAT Credit for duty payment on goods cleared in the DTA. The Tribunal disagreed, stating that the appellant had cleared goods using CENVAT Credit and had surplus credit, justifying the refund eligibility.

3. The appellant argued that Rule 6 of CENVAT Credit Rules, concerning exempted goods, did not apply to exports under bond. The Tribunal agreed, emphasizing that the appellant was exporting goods under bond, making the credit admissible.

4. The Tribunal analyzed the unique circumstances where duty was paid before de-bonding, allowing the appellant to claim CENVAT Credit post de-bonding. The judgment highlighted the importance of proper utilization and refund eligibility based on accumulated credit that could not be utilized.

5. Regarding the limitation period for refund claims, the Tribunal referenced a previous case to establish that the limitation starts when it is concluded that credit cannot be utilized. In this case, the conclusion was reached post de-bonding when the product became duty-exempt, justifying the refund claim.

6. The Tribunal addressed the requirement of exporting goods under bond for refund eligibility, confirming that the appellant fulfilled this condition for all refund claims. Ultimately, the Tribunal allowed the appeals, granting the appellant consequential relief.

This detailed analysis of the judgment highlights the complex legal considerations and interpretations made by the Tribunal in addressing the various issues raised in the case.