2012 (12) TMI 259 - AT - Central Excise

Refund - Cenvat credit of input services - processing of frozen shrimp and frozen fish export Held that - Frozen shrimps and frozen fish are attracting no duty or rather nil rate of duty and, therefore, need not be cleared on execution of any bond as there is no duty liability. As there is no duty liability and the appellants are undisputedly manufacturing only exempted goods ( nil rated goods) during the disputed period the bar prescribed in terms of Rule 6(1) of the CENVAT Credit Rules shall apply - as the appellants are processing only exempted products and since the bar under Rule 6(1) of the CENVAT Credit Rules shall apply, the question of their executing a bond envisaged under Rule 5 of CENVAT Credit Rules does not arise - Decided against the assessee.

Summary

Issues:
1. Whether the charges paid for certain services can be considered as 'input services' for claiming CENVAT credit.
2. Whether the export of goods under 'nil' rate of duty qualifies for refund under Rule 5 of the CENVAT Credit Rules.
3. Whether the appellant is eligible for CENVAT credit on goods exported under 'nil' rate of duty without executing a bond.

Analysis:

Issue 1:
The appellant claimed refund of accumulated credit for charges paid on services like testing, transport, commission agent, and surveyors. The original authority rejected the claim stating that the export was not done under bond or letter of undertaking as required by Rule 5 of the CENVAT Credit Rules. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

Issue 2:
The appellant argued that since the frozen shrimp and fish were subject to 'nil' rate of duty, they should be considered as 'exempted goods' under the CENVAT Credit Rules. The appellant contended that the lack of execution of a bond should not deny the CENVAT credit available for export goods, citing relevant case laws to support their interpretation of the rules.

Issue 3:
The Tribunal analyzed the definition of 'exempted goods' under Rule 2(d) and the provisions of Rule 6 of the CENVAT Credit Rules. It was established that the frozen shrimp and fish, attracting 'nil' rate of duty, fell under the category of 'exempted goods'. Since there was no duty liability due to the 'nil' rate of duty, the requirement of executing a bond for export did not apply. The Tribunal concluded that the appellant, dealing with only 'exempted goods', was not required to execute a bond as per Rule 5 of the CENVAT Credit Rules, and thus, rejected the appeal.

In summary, the Tribunal upheld the decision rejecting the appellant's claim for CENVAT credit refund, emphasizing that the export of goods under 'nil' rate of duty does not necessitate the execution of a bond for claiming such credit. The judgment clarified the interpretation of 'exempted goods' and the conditions for claiming CENVAT credit under the relevant rules.