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2015 (10) TMI 2348 - AT - Central ExciseRefund of duty paid earlier on export of goods - Exemption of Basic Excise Duty in terms of Notification No. 6/2002-CE as amended by Notification No. 23/2004-CE dated 8.7.2004 - original adjudicating authority rejected the refund claims on the grounds that the appellants were not eligible for availing CENVAT Credit for inputs used in the final product in terms of Rule 6(1) of the Cenvat Credit Rules - held that - Issue in the case of Jolly Board Ltd. (2014 (3) TMI 124 - CESTAT MUMBAI) is different than the issue in the present appeal. Further, I find that the learned Commissioner (Appeals) has admitted that no tax was payable when the tractor was cleared in the DTA for testing purpose and the same could have been done by adopting the process of Rule 4(5)(a) of the Cenvat Credit Rules. Accordingly, even when the tax is paid under mistake by way of reversal of CENVAT Credit, the same becomes refundable on the subsequent export of the goods by the assessee. Hence, in view of the fact that the same tractors were admittedly brought back in the factory of the appellant and after testing etc. were cleared for export under Bond and by virtue of Rule 6(6)(v) of Cenvat Credit Rules the provisions of sub-rule (i), (ii), (iii) & (iv) of Rule 6 are inapplicable. Accordingly, the amounted deposited become refundable - Impugned order is set aside - Decided in favour of assessee.
Issues:
1. Eligibility of CENVAT Credit for inputs used in the manufacture of tractors. 2. Applicability of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. 3. Reversal of CENVAT Credit equivalent to 10% of the price of tractors. 4. Refund claims for duty paid at the time of clearance in DTA for testing. 5. Interpretation of Rule 6(1) of the Cenvat Credit Rules. 6. Export of tractors under Bond and refund eligibility. 7. Comparison with previous Tribunal rulings. Detailed Analysis: 1. The appellant, a manufacturer of tractors, appealed against the rejection of refund claims by the original adjudicating authority. The issue revolved around the eligibility of the appellant to avail CENVAT Credit for inputs used in the manufacture of tractors as per Rule 6(1) of the Cenvat Credit Rules. 2. The Commissioner of Central Excise (Appeals) rejected the appeal, stating that the provisions of Rule 6(3)(b) of the Cenvat Credit Rules were not applicable in this case. The Commissioner observed that tractors and aggregates for tractors were exempted, leading to the conclusion that CENVAT Credit was not available on inputs used in the manufacture of tractors. 3. The appellant argued that they manufactured both taxable and tax-free products using common inputs. They cleared tractors for testing by paying 10% of the assessable value as a reversal of CENVAT Credit. After testing, the tractors were brought back to the factory and then exported under Bond. The appellant claimed a refund of the amount paid earlier, citing export as the reason for inapplicability of certain Cenvat Credit Rules. 4. The Tribunal considered previous rulings, including the case of Escort Ltd., where the denial of Modvat credit and levy of 8% on exempted products were deemed impermissible. The Tribunal held that CENVAT Credit could not be denied on exempted goods if certain conditions were met, similar to the appellant's situation. 5. The Tribunal analyzed the issue in light of the Jolly Board Ltd. case and distinguished it from the present appeal. It was noted that the tax was not payable when the tractors were cleared for testing, and the process under Rule 4(5)(a) of the Cenvat Credit Rules could have been adopted. The Tribunal concluded that the amount deposited as a reversal of CENVAT Credit became refundable upon subsequent export of the goods. 6. Consequently, the Tribunal allowed the appeal, set aside the impugned order, and directed the adjudicating authority to disburse the refund within a specified timeframe along with interest, in accordance with the Rules. 7. The judgment highlighted the importance of correctly interpreting and applying the Cenvat Credit Rules in cases involving the manufacture, testing, and export of goods to ensure fair treatment and adherence to legal provisions.
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