2003 (9) TMI 197 - AT - Central Excise

Summary

Issues Involved:
The issues involved in this case are the admissibility of Modvat credit on goods cleared for export under bond, the utilization of accumulated Cenvat credit, and the applicability of relevant rules and tribunal decisions.

Admissibility of Modvat Credit:
The respondents cleared high-tension steel wires against CT-2 certificates at nil rate of Central Excise duty to another factory for special industrial purpose. They were availing Modvat credit on the wire rods used in the manufacture of concrete railway sleepers. The Commissioner (Appeals) allowed the appeal based on the Tribunal's decision in the case of Orissa Synthetics Ltd., stating that goods cleared under Chapter X Procedure for export under bond should not hinder Modvat credit availment. The Tribunal held that products cleared under bond are not equivalent to exempted goods, making the recipient factory eligible for Modvat credit on wire rods as an extended unit of the appellant.

Utilization of Accumulated Cenvat Credit:
The respondents filed refund claims totaling Rs. 26,59,889 due to the inability to utilize accumulated Cenvat credit. The Tribunal referred to previous decisions, including one by the Hon'ble Tribunal of E.R.B., Kolkata, which emphasized that the final product's export, not the manufacturer's export, is the key condition for refund eligibility. The Tribunal concluded that there is no statutory requirement for the manufacturer to export, and if the final product is exported, the balance of Modvat credit should be refundable.

Applicability of Rules and Tribunal Decisions:
The Revenue did not dispute that the goods were eventually exported by the recipient factory after being used in sleeper manufacturing. Their objection was that the goods were not directly cleared for export from the manufacturing premises. The Tribunal noted that the fact of export was undisputed, and previous decisions supported the admissibility of refund under similar circumstances. The new rules allowed refund of Cenvat credit if accumulated credit could not be used for duty payment on final products cleared for home consumption or export. Consequently, the Tribunal rejected the Revenue's appeal, affirming the admissibility of the refund based on existing rules and tribunal decisions.