2017 (3) TMI 1436 - AT - Central Excise

Export of exempted goods - medicaments - common inputs in dutiable goods and exempted goods - Held that - the identical issue has come up before Hon ble Bombay High Court in the case of Repro India Ltd. Vs. Union of India 2007 (12) TMI 209 - BOMBAY HIGH COURT , where it was held that credit is available on inputs used in mfg. of goods exported even if goods are exempted - credit allowed - appeal dismissed - decided against Department.

Summary

Issues:
Claim of Cenvat credit on inputs used in manufacturing of exempted products for export under bond.

Analysis:
The appeal was filed against the Order-in-Appeal No. 166/2008 dated 29.8.2008, concerning the period from April 2006 to March 2007. The respondent was involved in manufacturing patent or proprietary medicaments classifiable under Tariff Heading No. 30.04 of CET 1985. Alongside duty-chargeable medicaments, the respondent also manufactured life-saving medicaments exempted from excise duty under Notification No. 6/2006-CE dated 1.3.2006. The appellant claimed Cenvat credit on inputs used in manufacturing the medicines, which were also exported. The adjudicating authority allowed the claim, leading to the department filing the present appeal.

During the hearing, the issue of Cenvat credit on inputs used in manufacturing exempted products for export under bond was discussed. Reference was made to a judgment by the Hon'ble Bombay High Court in the case of Repro India Ltd. vs. Union of India, where it was highlighted that Rule 6(6)(v) of the Cenvat Credit Rules, 2004, allows for an exemption in cases where excisable goods are removed without payment of duty for export under bond. The court emphasized that denying the permission to export under bond and levying duty on exported goods would nullify the provisions of Rule 6(6)(v). The court also explained the rationale behind such exemptions, aiming to make Indian goods internationally competitive by not levying duty on inputs used in export products.

Further, the judgment in the case of Union of India vs. Sharp Menthol India Ltd. was referenced, where similar views were upheld by the Hon'ble Supreme Court. Following the precedents set by these cases, the tribunal found no reason to interfere with the impugned order and dismissed the appeal filed by the department. The decision was made in line with the reasoning provided in the referenced judgments, emphasizing the importance of Cenvat credit on inputs used in export products to maintain international competitiveness and avoid double taxation.

In conclusion, the tribunal upheld the decision to allow Cenvat credit on inputs used in manufacturing exempted products for export under bond, in accordance with Rule 6(6)(v) of the Cenvat Credit Rules, 2004. The appeal filed by the department was dismissed, and cross objections were also disposed of based on the principles established in previous judgments by the Hon'ble courts.