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2018 (2) TMI 926 - AT - Service TaxCENVAT credit - input/input services - Revenue is of the view that as the goods exported by the respondent is an exempted goods, therefore as per Rule 6(1) of the Cenvat Credit Rules 2004, they are not entitled to cenvat credit on input/input services used for manufacturing of exempted goods - Held that - identical issue decided in the case of JOLLY BOARD LTD Versus COMMISSIONER OF CENTRAL EXCISE 2014 (3) TMI 124 - CESTAT MUMBAI , where it was held that CENVAT credit used in the manufacture of final product being exported irrespective of the fact that final product are otherwise exempted by provisions of Rule 6(6)(v) of the CENVAT Credit Rules, 2004 are applicable - refund allowed - appeal dismissed - decided against Revenue.
Issues:
1. Entitlement to cenvat credit on input services used for manufacturing exempted goods. 2. Refund claim under Rule 5 read with Notification No. 5/2006 CE dated 14.03.2006. 3. Interpretation of Rule 6(1) of the Cenvat Credit Rules 2004. 4. Applicability of exception clauses in Rule 6(5) and 6(6) of the Cenvat Credit Rules. 5. Execution of bonds for export of exempted goods. Analysis: Issue 1: The case involved the entitlement of cenvat credit on input services used for manufacturing exempted goods. The Revenue contended that as the goods exported were exempted, the respondent was not entitled to cenvat credit. The Commissioner (Appeals) allowed the refund claims, leading to the Revenue's appeal. Issue 2: The respondent filed a refund claim under Rule 5 read with Notification No. 5/2006 CE dated 14.03.2006 due to the inability to utilize cenvat credit on input services. The Revenue argued against the refund, citing Rule 6(1) of the Cenvat Credit Rules 2004. Issue 3: The main argument revolved around the interpretation of Rule 6(1) of the Cenvat Credit Rules 2004, which restricts cenvat credit on input services for manufacturing exempted goods. The Tribunal referred to the decision in the case of Jolly Board Ltd. and analyzed the legislative intent to avoid exporting taxes. Issue 4: The Tribunal discussed the applicability of exception clauses in Rule 6(5) and 6(6) of the Cenvat Credit Rules. Citing the case of Drish Shoes Ltd., the Tribunal highlighted the importance of these exception clauses in allowing cenvat credit on inputs for goods exported under bond without payment of duty. Issue 5: The issue of execution of bonds for export of exempted goods was raised. The Tribunal referenced previous cases like Salzer Controls Ltd. and Paras Ship Breakers Ltd. to emphasize that non-execution of bonds was considered a technical lapse, especially when goods were exempted. In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal. The Tribunal found no infirmity in the impugned order, citing precedents and the legislative intent behind the Cenvat Credit Rules. The judgment highlighted the importance of exception clauses in allowing cenvat credit for goods exported under specific conditions, ultimately leading to the dismissal of the Revenue's appeal.
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