2015 (4) TMI 487 - AT - Central Excise

Denial of CENVAT Credit - export of exempted goods - Common inputs - manufacture of dutiable final products hand tools which had been cleared on payment of duty and garden tools which are fully exempt from duty under notification no.5/-3006-CE dated 1.3.2006 - garden tools have been exported out of India under letter of undertaking without payment of duty - Held that - garden tools fully exempted from payment of duty had been exported under letter of undertaking and, therefore, in terms of Rule 5 of Cenvat Credit Rules, the input duty credit availed in respect of inputs used in the manufacture of such garden tools can be utilized by the manufacturer for payment of duty on final products cleared for home consumption or for export on payment of duty. Thus, in this case, the respondent have correctly availed the cenvat credit in respect of the inputs for garden tools which were exported out of India and have correctly utilized the credit for payment of duty on the other dutiable final products which were exported out of India under rebate claim. - Following decision of Repro India 2007 (12) TMI 209 - BOMBAY HIGH COURT - Decided against Revenue.

Summary

Issues:
- Appeal against Commissioner (Appeals) order
- Interpretation of Rule 5 of Cenvat Credit Rules, 2004
- Application of Rule 6(6)(v) of Cenvat Credit Rules
- Exemption of excisable goods for export under bond
- Comparison of Rule 6(6) of Cenvat Credit Rules, 2002 and 2004

Analysis:
The judgment deals with an appeal against the order of the Commissioner (Appeals) where the Tribunal considered the interpretation of Rule 5 of the Cenvat Credit Rules, 2004. The Tribunal examined the case where common cenvat availed inputs were used for manufacturing final products, some dutiable and some fully exempt from duty. The Tribunal referred to Rule 5, emphasizing that when inputs are used for manufacturing final products cleared for export under bond or letter of undertaking, the cenvat credit can be utilized for payment of duty on other final products. The Tribunal also cited a similar view taken by the Bombay High Court regarding the application of Rule 6(6)(v) of the Cenvat Credit Rules, which exempts excisable goods cleared for export under bond from certain provisions.

Furthermore, the judgment delves into the comparison between Rule 6(6) of the Cenvat Credit Rules, 2002 and 2004. It highlights that the objective of Rule 6(6) of the Cenvat Credit Rules, 2004 is to promote the government's policy of allowing duty paid on inputs as credit for exempted goods and goods exported under bond. The Tribunal clarified that the term "excisable goods" in Rule 6(6) of the Cenvat Credit Rules, 2004 is broader than "exempted goods," covering both dutiable and exempted goods exported under bond.

The Tribunal concluded that there was no infirmity in the impugned order, ultimately dismissing the appeal. The decision reaffirmed the applicability of Rule 5 and Rule 6(6)(v) in cases involving the utilization of cenvat credit for duty payments on final products cleared for export under bond, even if some final products are fully exempt from duty. The judgment provided a detailed analysis of the relevant rules and their application in the context of the case, ensuring clarity on the treatment of cenvat credit in such scenarios.