2025 (1) TMI 417 - AT - Central Excise

Refund claim - CENVAT Credit for goods cleared under exemption Notification No. 4/2006-CE for export - Applicability of rule 6(6)(v) of CCR - HELD THAT - In the present case the appellant have reversed the amount in terms of Rule 6(3) in respect of the exempted goods under Notification No. 4/2006-CE and cleared for export and for the said reversal the appellant filed the refund claim. On the identical issue in the appellant s own case where the revenue had demanded the amount under rule 6(3) in respect of the similar nature of export this tribunal vide order no. 11450-11451/2023 dated 07.07.2023 2023 (7) TMI 360 - CESTAT AHMEDABAD held that the appellant was not required to pay an amount under rule 6(3) of Cenvat Credit Rules even though the goods are exempted under Notification No. 4/2006-CE for the reason that the said notification is conditional one. The appellant have reversed the Cenvat Credit amount in terms of rules 6(3) therefore claiming refund of the same amount is nothing but seeking a credited of the Cenvat amount. It is a settled law that if any amount of Cenvat is reversed for any reason which is not liable to be reversed the same can be recredited in the Cenvat account if the amount is reversed from Cenvat account. If the said amount was reversed from the cash the appellant is entitled for the cash account. Therefore, the contention of the revenue that the present refund is not governed by Section 11B is not relevant in the facts in the present case. Conclusion - The exempted goods cleared for export under bond are eligible for Cenvat Credit, and reversal under Rule 6(3) is not justified. The Appellant is not required to pay an amount under Rule 6(3) of Cenvat Credit Rules in respect of the goods exported under Notification No. 4/2006-CE in terms of Rule 6(6)(v) of Cenvat Credit Rules, 2004. The impugned order is not sustainable - Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the Appellant is entitled to Cenvat Credit for goods cleared under exemption Notification No. 4/2006-CE for export, in light of Rule 6(6)(v) of the Cenvat Credit Rules, 2004.
Whether the reversal of Cenvat Credit under Rule 6(3) was justified and if the Appellant is entitled to a refund of the reversed amount.
Whether the Appellant's actions were in violation of Notification No. 42/2001-CE(NT) and the implications of such actions on the applicability of Rule 6(6)(v).
Whether the demand for reversal of Cenvat Credit under Rule 6(3) is sustainable on the grounds of limitation and merits.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Cenvat Credit for Exempted Goods Cleared for Export

Relevant Legal Framework and Precedents: Rule 6(6)(v) of the Cenvat Credit Rules, 2004, allows credit for goods cleared for export without payment of duty. Precedents include judgments in cases like Drish Shoes Ltd and Repro India Ltd, which support the interpretation that exempted goods cleared for export under bond are eligible for Cenvat Credit.
Court's Interpretation and Reasoning: The court found that the exemption under Notification No. 4/2006-CE is conditional, allowing the Appellant the option to avail or not avail the exemption. The court emphasized that the notification is not absolute, thus supporting the Appellant's claim for Cenvat Credit.
Key Evidence and Findings: The Appellant's previous tribunal orders and judgments were cited, establishing a precedent that the Appellant is not required to pay under Rule 6(3) for goods exported under bond.
Application of Law to Facts: The court applied Rule 6(6)(v) to conclude that the Appellant's goods cleared for export under bond are eligible for Cenvat Credit, negating the need for reversal under Rule 6(3).
Treatment of Competing Arguments: The Respondent's argument that the Appellant's clearance under Notification No. 42/2001-CE(NT) was not valid was dismissed, as the Appellant's export under bond was accepted by the revenue, thus falling under Rule 6(6)(v).
Conclusions: The Appellant is entitled to Cenvat Credit for goods cleared under exemption for export, and the reversal of credit was unjustified.

Issue 2: Justification for Reversal of Cenvat Credit and Refund Entitlement

Relevant Legal Framework and Precedents: Rule 6(3) of the Cenvat Credit Rules, 2004, and Section 11B of the Central Excise Act, 1944, regarding refunds. Precedents include judgments in cases like Drish Shoes Ltd and Repro India Ltd.
Court's Interpretation and Reasoning: The court held that since the Appellant was not liable to reverse the credit under Rule 6(3), they are entitled to a refund. The reversal was not excise duty, thus not governed by Section 11B.
Key Evidence and Findings: The Appellant's previous tribunal orders supported the claim that the reversal was not required, and thus the refund is justified.
Application of Law to Facts: The court found that the refund claim is valid as the reversal was not required under the applicable rules.
Treatment of Competing Arguments: The Respondent's reliance on judgments like Nashik SSK Ltd was distinguished as not applicable to the present case.
Conclusions: The Appellant is entitled to a refund of the reversed Cenvat Credit amount.

Issue 3: Violation of Notification No. 42/2001-CE(NT) and Applicability of Rule 6(6)(v)

Relevant Legal Framework and Precedents: Notification No. 42/2001-CE(NT) and Rule 6(6)(v) of the Cenvat Credit Rules, 2004.
Court's Interpretation and Reasoning: The court found that despite the condition in Notification No. 42/2001-CE(NT), the Appellant's clearance under bond was accepted by the revenue, thus eligible under Rule 6(6)(v).
Key Evidence and Findings: The Appellant's export under bond was accepted by the revenue, supporting the applicability of Rule 6(6)(v).
Application of Law to Facts: The court applied Rule 6(6)(v) to conclude that the Appellant's clearance under bond is valid, despite the condition in Notification No. 42/2001-CE(NT).
Treatment of Competing Arguments: The Respondent's argument of violation was dismissed as the clearance was accepted by the revenue, and no case was made for violation of the notification.
Conclusions: The Appellant's actions do not violate Notification No. 42/2001-CE(NT), and Rule 6(6)(v) is applicable.

Issue 4: Sustainability of Demand under Rule 6(3) on Limitation and Merits

Relevant Legal Framework and Precedents: Rule 6(3) of the Cenvat Credit Rules, 2004, and limitation principles under the Central Excise Act, 1944. Precedents include judgments like Pushpam Pharmaceuticals and Cosmic Dye Chemical.
Court's Interpretation and Reasoning: The court found that the demand is not sustainable on merits as the reversal was not required, and on limitation as the extended period was wrongly invoked.
Key Evidence and Findings: The Appellant's records and compliance with procedural requirements demonstrated no suppression of facts, negating the extended period invocation.
Application of Law to Facts: The court applied limitation principles to conclude that the demand is time-barred and not sustainable on merits.
Treatment of Competing Arguments: The Respondent's arguments on limitation were dismissed as the Appellant had disclosed all relevant facts and complied with procedural requirements.
Conclusions: The demand under Rule 6(3) is not sustainable on both limitation and merits.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The Appellant is not required to pay an amount under Rule 6(3) of Cenvat Credit Rules in respect of the goods exported under Notification No. 4/2006-CE in terms of Rule 6(6)(v) of Cenvat Credit Rules, 2004."
Core Principles Established: The court established that exempted goods cleared for export under bond are eligible for Cenvat Credit, and reversal under Rule 6(3) is not justified. The court also emphasized the non-applicability of extended limitation in cases of full disclosure and compliance.
Final Determinations on Each Issue: The Appellant is entitled to Cenvat Credit and a refund of the reversed amount. The reversal under Rule 6(3) is unjustified, and the demand is not sustainable on limitation and merits.

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