2008 (1) TMI 210 - AT - Central Excise

Mfg. of stainless steel utensils by availing credit on inputs - appellants made export of stainless steel utensils and filed a refund claim in respect of credit availed on inputs - denial of credit on the ground that as the exported goods were exempted from payment of duty and the appellants were not entitled for any credit and credit will lapse, hence, no refund, is not acceptable in case of export credit is entitled even if, export goods are exempted export proof produced refund entitled

Summary

Issues Involved:
Refund claim rejection based on exemption of exported goods from duty payment and procedural non-compliance.

Analysis:
1. The appellants, engaged in manufacturing stainless steel utensils, filed an appeal against the rejection of their refund claim for CENVAT Credit on inputs used in goods exported, which were exempt from Central Excise duty.

2. The contention of the appellants was based on Rule 5 of CENVAT Credit Rules, stating that they were entitled to a refund of CENVAT Credit on inputs used in exported goods, even if the goods were exempted from duty payment. They argued that Rule 6, which restricts credit for inputs used in exempted goods, does not apply to goods cleared for export.

3. The appellants presented various documents, including shipping bills, AR E-1, and bank certificates, to prove the export of goods. They argued that the Commissioner (Appeals) incorrectly stated that these documents were not produced, leading to the rejection of the refund claim.

4. The Revenue contended that the proof of export was not adequately provided and that the production of documents in response to the show cause notice was an afterthought. They argued that the onus was on the appellants to prove the export of goods for the refund claim.

5. The judgment highlighted Rule 5 of CENVAT Credit Rules, which allows manufacturers to claim a refund of CENVAT Credit on inputs used in exported goods, irrespective of duty exemption. It also referenced Rule 6, clarifying that the restriction on credit for inputs used in exempted goods does not apply to goods cleared for export.

6. The Supplementary Central Excise Manual further supported the appellants' claim, stating that manufacturers are entitled to credit on inputs used in exported goods, whether exempted or dutiable. The manual clarified that the benefit of input stage rebate can be claimed on all finished goods exported.

7. The judgment concluded that the appellants had provided sufficient proof of export through relevant documents in response to the show cause notice. It overturned the impugned order, stating that the appellants were entitled to the refund claim based on the provisions of the Central Excise Rules and the clarification in the manual.