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2015 (10) TMI 1293 - AT - Central ExciseRefund claim - Denial of CENVAT Credit - Export of exempted goods - in the case of the export under bond whether the appellant is entitled to claim refund of duty in terms of Rule 19 of the Central Excise Rules, 2002 or not - held that - The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted products are exported outside India, the provisions of Rule 6 (6) (v) of the CENVAT Credit Rules are applicable. Therefore, the bar provided under Rule 6 (1) and the liability created under Rule 6 (3) (b) of the CENVAT Credit Rules, 2004 are not attracted. By denying to the petitioner from exporting the printed books under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6 (3) (b) of the CENVAT Credit Rules, 2004. Direction of the respondent no. 2 to the petitioners to pay 10% even though printed books were exported as not legally sustainable. It is only in the event the petitioners does not export the printed goods and do not maintain the account as contemplated by rule 6 (2) the petitioner would be required to pay 10% on the sale price of the printed books not so exported. - no CENVAT Credit will be available in respect of the inputs used in the manufacture of exempted products, Rule 6 (6) (v) of the CENVAT Credit Rules creates an exemption inter alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 2002. Considering the language of Rule 6 (6) (v) of the CENVAT Credit Rules, 2004, the petitioners are entitled to avail CENVAT CREDIT in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt. Both from the point of Government and the assessee is to allow the assesses to take CENVAT Credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, CENVAT Credit is refunded in cash. This appears to be the Scheme of Rule 5 of the CENVAT Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6 (6) (v) of the CENVAT Credit Rules, 2004 to the effect that the bar created by Rule 6 (1) will not apply for goods exported. Considering the conscious and express provisions contained in Rule 6 (6) (v) for exported goods, to deny the permission to export under bond and / or to levy 10% on the value of the exported goods under Rule 6 (3) (b) on the footing that the printed books exempted and, therefore, attract Rule 6 (1) would be incorrect and completely nullify and frustrate Rule 6 (6) (v). Sub-rule (i) to (vi) are identical and the difference in Rule 6 (6) of the CENVAT Credit Rules, 2004 and Rule 6 (5) of the CENVAT Credit Rules, 2002 is not relevant for the purpose of the present case. Rule 6 (1), 6 (2), 6 (3), 6 (4) of the CENVAT Credit Rules under CENVAT Credit Rules, 2002 as well as under the CENVAT Credit Rules, 2004 remains the same. As noted earlier the object and purpose of Rule 6 (6) of CENVAT Credit Rules, 2004 is to promote the policy of the Government that the benefit of duty paid on input is available as credit in respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6 (6), of the CENVAT Credit Rules, 2004 by using the term excisable goods instead of exempted goods is that the term exempted goods may not cover the dutiable goods which are exported under bond. Therefore, in order to widen and cover both dutiable and exempted goods exported under bond Rule 6 (6) of CENVAT Credit Rules, 2004 uses the expression excisable goods . As an illustration, if a car which is dutiable is exported under bond without payment of duty there may be doubt as to whether credit on the inputs will be available, since the car is cleared without payment of duty under Rule 6 (5) of CENVAT Credit Rules, 2002. It could be argued that it covers only the exempted goods exported and not dutiable goods exported. In order to cover such a situation also, Rule 6 (6) of CENVAT Credit Rules, 2004 used the expression excisable goods which is wider to include both dutiable as well as exempted goods. - petitioners are entitled to remove the goods on furnishing the bond as set out in Annexure 16 in Form B-1 of the Central Excise Manual. Refund allowed - Decided in favour of assessee.
Issues Involved:
1. Denial of refund under Rule 5 of the CENVAT Credit Rules, 2004. 2. Applicability of Rule 6 of the CENVAT Credit Rules, 2004. 3. Entitlement to CENVAT Credit for exported goods under bond. Detailed Analysis: 1. Denial of Refund under Rule 5 of the CENVAT Credit Rules, 2004: The appellants challenged the denial of their refund claim under Rule 5 of the CENVAT Credit Rules, 2004, for the export of Menthol Crystals under bond as per Rule 19 of the Central Excise Rules, 2002. The Revenue argued that since the Menthol Crystals became exempt from duty w.e.f. 1/3/2008, the CENVAT Credit balance as on that date should lapse, and the appellants cannot utilize it for any other final product, whether for home consumption or export. Consequently, the Adjudicating Authority denied the rebate/refund scheme, which was partially upheld by the Commissioner (Appeals), leading to the current appeal. 2. Applicability of Rule 6 of the CENVAT Credit Rules, 2004: The Tribunal referred to its previous decision in the appellant's own case, Nav Bharat Impex Vs. Commissioner of Central Excise, Delhi, where it was held that the appellant is entitled to avail CENVAT Credit and reversal of credit is not warranted. The Tribunal clarified that Rule 6(2) mandates maintaining separate accounts for dutiable and exempted goods. If separate accounts are not maintained, Rule 6(3) allows clearing exempted goods by paying 8% or 10% of the value of the goods. The Tribunal rejected the Revenue's argument that Rule 6(1) applies, stating that Rule 6(6)(v) specifically excludes the applicability of sub-rules (1), (2), (3), and (4) for goods exported under bond. 3. Entitlement to CENVAT Credit for Exported Goods under Bond: The Tribunal emphasized that Rule 6(6)(v) of the CENVAT Credit Rules, 2004, allows CENVAT Credit for inputs used in the manufacture of final products exported under bond, irrespective of the final product being exempt. This provision aims to ensure that duty is not levied on inputs used in export products, making Indian goods internationally competitive. The Tribunal cited the Bombay High Court's decision in Repro India Ltd. Vs. Union of India, which supported the view that Rule 6(6)(v) is intended to avoid double taxation and promote exports by allowing CENVAT Credit on inputs used in exempted goods exported under bond. Conclusion: The Tribunal allowed the refund claim filed by the appellant under Rule 5 of the CENVAT Credit Rules, 2004, for exports made under bond in terms of Rule 19 of the Central Excise Rules, 2002. The impugned order was set aside concerning the rejection of the refund claim, and the appeal was allowed with consequential relief.
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