2019 (7) TMI 1350 - AT - Service Tax

Refund of CENVAT Credit - refund rejected on the ground that the respondents were not eligible to avail the CENVAT credit on input services in the first place in view of the bar contained in Rule 6 of CCR - HELD THAT - Commissioner (Appeals) has rightly held that the respondents are entitled to cenvat credit and there is no provisions contained in Rule 6(1) of the Cenvat Credit Rules when the final product is exempted from Central Excise duty by virtue of Notification 4/2006 CE dated 01.03.2006 - further, Commissioner (Appeals) has relied upon various decisions which have consistently held that the assessee is entitled to avail credit of service tax paid on input services when they are producing exempted excisable goods which are chargeable to nil rate of duty. Hon ble Karnataka High Court in the case of COMMISSIONER OF CUSTOMS, BANGALORE VERSUS ANZ INTERNATIONAL 2008 (6) TMI 155 - KARNATAKA HIGH COURT it has been held that the provisions of Rule 6 of Cenvat Credit Rules are not applicable when the goods are exported under bond - The High Court judgment has been maintained by the Hon ble Supreme Court in COMMISSIONER VERSUS ANZ INTERNATIONAL 2009 (3) TMI 999 - SC ORDER . There is no infirmity in the impugned order passed by the Commissioner (Appeals) based on the decision of the Tribunal and the High Court - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Eligibility of availing CENVAT credit on input services for manufacturing and exporting exempted goods
- Requirement of furnishing bond or Letter of Undertaking while exporting goods chargeable to nil rate of duty

Analysis:

Issue 1: Eligibility of availing CENVAT credit on input services for manufacturing and exporting exempted goods
The appeal was filed by the Revenue against the order passed by the Commissioner(Appeals) for de novo adjudication of two appeals concerning the eligibility of the respondents to avail CENVAT credit on input services used for manufacturing and exporting iron ore fines. The Revenue contended that the respondents were not entitled to the credit as they manufactured exempted final goods. However, the Commissioner(Appeals) held that the respondents were eligible to avail the credit based on statutory provisions and judicial decisions. The Tribunal found that the respondents were entitled to the credit as the final product was exempted from Central Excise duty, and various decisions supported the allowance of credit for producing exempted excisable goods chargeable to nil rate of duty. The Tribunal referenced previous judgments and held that there was no infirmity in the Commissioner(Appeals)'s decision, ultimately dismissing the Revenue's appeal.

Issue 2: Requirement of furnishing bond or Letter of Undertaking while exporting goods chargeable to nil rate of duty
The learned counsel for the respondents argued that since the iron ore fines were excisable goods cleared at nil rate of duty under a specific entry in the Central Excise Tariff Act, there was no need for the respondents to obtain Central Excise Registration or furnish a bond while exporting the goods. The Commissioner(Appeals) also noted that no registration certificate was required due to the exemption under Notification No.36/01-CE(NT) for goods chargeable to nil rate of duty. The Tribunal concurred with this view, citing relevant case laws and decisions, including judgments from the High Court and CESTAT, which supported the position that no bond or Letter of Undertaking was necessary when exporting exempted goods. The Tribunal upheld the Commissioner(Appeals)'s decision based on the established legal precedents, further dismissing the Revenue's appeal and disposing of the cross objection accordingly.

This detailed analysis of the legal judgment highlights the issues involved, the arguments presented by both parties, the reasoning of the Commissioner(Appeals), and the Tribunal's decision based on relevant legal principles and precedents.