2024 (5) TMI 932 - AT - Central Excise

Refund of accumulated Cenvat Credit - export of goods which are exempted from payment of duty - goods not exported under bond - rejection of refund on the ground that in view of N/N.42/2001 CE, Appellant was not eligible to export goods under bond - HELD THAT - This issue is no more res integra. It is by now the settled law that refund of accumulated Cenvat Credit is allowable on export of goods even if they are exempted from payment of Central Excise Duty. It has also been the settled law that export under bond is only a procedure. The claim for refund should not be disallowed when the fact of export is not in dispute. In the case of JOLLY BOARD LTD VERSUS COMMISSIONER OF CENTRAL EXCISE 2014 (3) TMI 124 - CESTAT MUMBAI , the refund claim of the party was denied by Lower Authorities on the ground that the assessee is the manufacturer of exempted goods, therefore as per Rule 6 (1) of CCR, 2004, they are not entitled to take input credit. Consequently, they are not entitled to file refund claim. Another reason for denial of refund was that goods are not exported under bond - In the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DRISH SHOES LTD. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT , the Hon ble High Court of Himachal Pradesh was also examining the similar issue. It held that input credit is allowable when exempted goods are exported under bond. Refund under Rule 5 of CCR, 2004 is allowable to the manufacturer, who exports the final products which are exempt from duty. The Appellant is eligible for Cenvat Credit of input and input services which are used in export of goods and are exempted from payment of Central Excise Duty. In terms of Rule 5 of CCR, 2004, they are eligible for refund of accumulated Cenvat Credit attributable to export of goods. Non submission of bond is only a procedural lapse. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.

Summary

Issues involved: Refund of accumulated Cenvat Credit on export of exempted goods without bond.

The appeal was filed against the rejection of a refund claim for accumulated Cenvat Credit by the Commissioner (Appeals) CGST, Noida. The Appellant, engaged in manufacturing various products falling under specific chapters of the Central Excise Tariff, filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004 for the period from April, 2017 to June, 2017. The claim pertained to Cenvat Credit attributable to export of goods exempted from duty. The claim was rejected on the grounds that the Appellant was not eligible to avail Cenvat Credit under Rule 6(1) of CCR, 2004 and was not eligible to export goods under bond as per Notification No.42/2001. The Commissioner (Appeals) upheld this decision, leading to the appeal. The main issue was whether refund of accumulated Cenvat Credit is allowable on export of exempted goods without bond.

The Appellant argued that the fact of export was not in dispute, and the substantive benefit of refund should not be denied for procedural reasons. They cited relevant case laws to support their position. The Departmental Representative supported the impugned order. After hearing both sides, the Tribunal considered the settled law on the issue of refund of accumulated Cenvat Credit on export of exempted goods.

The Tribunal noted that the Appellant had been allowed a refund for a prior period, indicating that the issue was well-established. Citing case laws, including Jolly Board Limited vs. Commissioner of Central Excise, Aurangabad, the Tribunal emphasized that the intent of the legislation was to avoid exporting taxes and that export under bond was a procedural requirement. The Tribunal referred to a decision of the Himachal Pradesh High Court and the Bombay High Court, confirming that manufacturers of goods chargeable to nil duty are eligible for Cenvat Credit on inputs used in export, even if the goods are exempt from duty. The Tribunal held that the Appellant was eligible for Cenvat Credit and refund of accumulated Cenvat Credit attributable to export of goods, despite the procedural lapse of not submitting a bond.

Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief, in line with the legal principles discussed in the judgment.