2013 (12) TMI 815 - AT - Central Excise

Applicability of Rule 6 of the Cenvat Credit Rules - Eligibility to avail cenvat credit Inputs consumed for the manufacture of exempted goods Cenvat credit availed on service tax in respect of input services - Benefit of Notification No. 30/2004 Held that - Following Repro India Ltd. v. Union of India 2007 (12) TMI 209 - BOMBAY HIGH COURT the expression excisable goods is wider than the expression exempted goods, as it includes both dutiable as also exempted goods - an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported - As per Rule 5 of CENVAT Credit Rules, 2004 a manufacturer, who exports the final products which are exempt from duty, can claim refund of CENVAT - The orders for rejection of the refund claims and also for the demand the Cenvat credit is ineligible. Rejection of refund claim - Services utilised for export of goods Held that - For export of goods, no tax is charged and there are also provisions of receiving inputs and services without payment of any duty or tax which are consumed in the manufacture of goods for export - refund claims and Cenvat credit cannot be denied by the departmental authorities Following COMMISSIONER OF CENTRAL EXCISE Versus DRISH SHOES LTD. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT - Decided in favour of assessee.

Summary

Issues Involved:
- Eligibility to avail Cenvat credit on inputs used for manufacturing exempted goods
- Rejection of refund claims for Cenvat credit availed on inputs

Analysis:

Issue 1: Eligibility to avail Cenvat credit on inputs used for manufacturing exempted goods:
The appeals were filed against orders stating the appellant was not eligible to avail Cenvat credit on inputs used for manufacturing exempted goods. The appellant argued that they had availed Cenvat credit for services related to the export of goods, not on Central Excise duty paid on inputs. They contended that the authorities' findings were inconsistent with established law cited from judgments of the Hon'ble High Courts of Bombay and Himachal Pradesh. The Revenue, however, argued that if goods are exempted, the appellant cannot claim the benefit of service tax paid. The Tribunal noted the consistent plea of the appellant that the Cenvat credit was for services used in exporting goods and that they had not entered into any Bond/LTU with authorities for export. Based on the spirit of legislation and relevant case law, the Tribunal held that the appellant, having exported goods and claimed service tax benefits, was eligible for Cenvat credit and refunds. The Tribunal referred to the judgment in the case of Drish Shoes Ltd. to support its decision.

Issue 2: Rejection of refund claims for Cenvat credit availed on inputs:
The Tribunal analyzed the Cenvat Credit Rules of 2002 and 2004 to determine the eligibility of the appellant for Cenvat credit and refunds on inputs used in manufacturing goods chargeable to nil duty and subsequently exported. It was established that under the exception clause of the rules, an assessee exporting goods chargeable to nil duty could avail Cenvat credit on inputs used in manufacturing such goods. The Tribunal referred to a Division Bench of the Bombay High Court's decision in Repro India Ltd. v. Union of India to support its interpretation that "excisable goods" include both dutiable and exempted goods. Consequently, the Tribunal dismissed the appeal against the rejection of refund claims, affirming the appellant's right to claim Cenvat credit and refunds for exported goods exempt from duty.

In conclusion, the Tribunal set aside the impugned orders, allowing all appeals with consequential relief, based on the established legal principles and interpretations of the Cenvat Credit Rules.