2007 (10) TMI 429 - HC - Central Excise

Whether Refund of Cenvat Credit paid on inputs (AED T&T) used in the manufacture of final products exported under rebate claim under Rule 18 of Central Excise Rules, 2002 on payment of duly, is allowed under Rule 5 of Cenvat Credit Rules, 2002 - assessee filed refund claim in respect of unutilised Cenvat Credit of Additional Excise Duty (Textiles and Textile Articles) paid on the inputs - assessee had exported finished goods on payment of Basic Excise Duty under rebate claim covered by Rule 18 of Central Excise Rules, 2002 - no Additional Excise Duty (T&T) was chargeable on the finished goods therefore, the Cenvat Credit of Additional Excise Duty (T&T) paid by the assessee on inputs remained unutilized. The rebate claim made by the assessee under the Excise Rules, 2002 was granted to them. Thereafter, the assessee filed refund claim of Additional Excise Duty (T&T) paid on inputs under Rule 5 of the CC Rules, 2002 Held that - refund allowed.

Summary

Issues:
1. Refund of Cenvat Credit paid on inputs used in the manufacture of final products exported under rebate claim.

Analysis:
The case involved a dispute regarding the refund of Cenvat Credit paid on inputs used in the manufacture of final products exported under a rebate claim. The appellant, the Commissioner of Central Excise, challenged the order passed by the Tribunal, questioning the admissibility of the refund claim under Rule 5 of the Cenvat Credit Rules, 2002. The main issue was whether the refund of Cenvat Credit paid on inputs used in the manufacture of final products exported under a rebate claim is allowed under Rule 5 of the Cenvat Credit Rules, 2002.

The assessee, engaged in manufacturing textile goods, filed a refund claim under Rule 5 of the CC Rules, 2002 for unutilized Cenvat Credit of Additional Excise Duty paid on inputs used in exported finished goods. The Assistant Commissioner rejected the claim, stating it was not maintainable as the export was made on payment of duty, not under a bond, and lacked input details. The Commissioner of Appeals allowed the appeal, emphasizing that the use of inputs was adequately proved, and the adjudicating authority exceeded the scope of the show cause notice.

On further appeal, the Tribunal upheld the Commissioner's decision, stating that the refund under Rule 5 requires the use of inputs in final products cleared for export. If drawbacks or rebate claims under CC Rules, 2002 were availed, refund of Modvat credit is disallowed. The Tribunal clarified the application of the Act to CC Rules, 2002 and the 1978 Act, defining "duty" under Rule 5. It concluded that as the exports were made on duty payment, not under bond, the refund under Rule 5 was permissible.

The High Court concurred with the Tribunal's decision, finding no legal infirmity. It noted that the refund claim fell within Rule 5 of the CC Rules, 2002, and the absence of a bond requirement during export precluded the Revenue's argument. The Court referenced precedents to support its interpretation of duty under the Act and the Excise Rules. It dismissed the appeal, emphasizing that the refund claim was valid as the inputs were used in exported final products subject to duty payment, not under a bond.

In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision that the refund claim under Rule 5 of the CC Rules, 2002 was admissible. The Court found no substantial question of law, as the claim was based on the utilization of Cenvat Credit on inputs used in exported final products subject to duty payment, aligning with the statutory provisions and precedents cited.