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2018 (8) TMI 358 - HC - Central ExciseRefund of accumulated CENVAT Credit - case of Revenue is that since the final product viz., Battery Operated Cars were exempted with effect from 1.3.2008, the assessee was not entitled to refund of the CENVAT credit as per Rule 5 of the CENVAT Credit Rules, 2004 - Held that - Reliance was placed in the case of REPRO INDIA LTD. VERSUS UNION OF INDIA 2007 (12) TMI 209 - BOMBAY HIGH COURT , where it was held that 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. Refund is to be allowed - appeal dismissed - decided against Revenue.
Issues Involved:
1. Entitlement to refund of accumulated CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004. 2. Applicability of Rule 11(3) of CENVAT Credit Rules, 2004, regarding transitory provisions. 3. Interpretation of Rule 6(6) of CENVAT Credit Rules, 2004, in the context of goods exported under bond. 4. Relevance of prior High Court decisions and their applicability to the present case. Issue-wise Detailed Analysis: 1. Entitlement to Refund of Accumulated CENVAT Credit: The core issue revolves around the assessee’s claim for a refund of accumulated CENVAT credit for periods July 2008 to June 2009 and July 2009 to February 2010. The assessee, a manufacturer of Battery Operated Cars, claimed a refund under Rule 5 of the CENVAT Credit Rules, 2004, following the exemption from excise duty on these cars effective from 1.3.2008. The adjudicating authority rejected the refund claim, but the Tribunal ruled in favor of the assessee, citing precedents from Repro India Ltd. vs. Union of India and Commissioner of Central Excise vs. Drish Shoes Ltd. The Revenue appealed this decision, arguing that the exemption of the final product disqualified the assessee from claiming a refund under Rule 5. 2. Applicability of Rule 11(3) of CENVAT Credit Rules, 2004: The Revenue’s counsel argued that Rule 11(3) of the CENVAT Credit Rules, 2004, which deals with transitional provisions, should apply. This rule mandates that a manufacturer opting for exemption must pay an amount equivalent to the CENVAT credit on inputs in stock or in process, with any remaining balance lapsing. The Revenue contended that this rule justified the denial of the refund. 3. Interpretation of Rule 6(6) of CENVAT Credit Rules, 2004: The assessee’s counsel countered that Rule 6(6) exempts certain cases from sub-rules (1), (2), (3), and (4) of Rule 6, specifically when excisable goods are exported under bond. The counsel argued that the exemption of excise duty on Battery Operated Cars did not alter their status as excisable goods. Hence, the export under bond should allow the refund of accumulated CENVAT credit. The Tribunal’s decision was supported by similar interpretations in Repro India Ltd. and Drish Shoes Ltd., which clarified that "excisable goods" in Rule 6(6) includes both dutiable and exempted goods exported under bond. 4. Relevance of Prior High Court Decisions: The Tribunal and the High Court referenced earlier decisions from the Bombay High Court (Repro India Ltd.) and the Himachal Pradesh High Court (Drish Shoes Ltd.), which were upheld by the Supreme Court. These decisions established that manufacturers of goods exempt from duty but exported under bond are entitled to CENVAT credit refunds. The Karnataka High Court found no reason to deviate from these precedents, reinforcing the Tribunal’s ruling in favor of the assessee. Conclusion: The Karnataka High Court dismissed the Revenue’s appeals, affirming that no substantial question of law arose from the Tribunal’s order. The court upheld the Tribunal’s decision, granting the refund of accumulated CENVAT credit to the assessee, and emphasized consistency with established judicial precedents. The appeals were found to be devoid of merit and were dismissed without costs.
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