2018 (3) TMI 342 - AT - Central Excise

Refund of CENVAT credit - export of goods - Held that - Similar issue came up before the Hon ble High Court of Bombay in the case of Repro India Ltd Vs UOI 2007 (12) TMI 209 - BOMBAY HIGH COURT wherein their Lordships went into detail as to whether the refund can be allowed in respect of CENVAT credit availed on inputs which are used for goods which are exempted or non-dutiable, and it was held that the petitioners are entitled to avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt. The 1st Appellate Authority was correct in coming to such a conclusion that the respondent is eligible for the refund of the amount. Appeal dismissed - decided against Revenue.

Summary

Issues:
Refund of CENVAT credit on inputs like blast furnace slag and furnace oil for goods exported or cleared for home consumption.

Analysis:
The appeal concerns the refund of CENVAT credit availed on inputs like blast furnace slag and furnace oil. The respondent procures these inputs, grinds them, and exports the resultant product, ground granulated blast furnace slag, or clears it for home consumption. The adjudicating authority rejected the refund claim, stating that the goods cleared for export are not considered manufactured goods. However, the 1st Appellate Authority set aside the order-in-original, emphasizing that the ground granulated blast furnace slag is a refined form of the inputs and should be eligible for credit under Rule 5 of the CENVAT Credit Rules 2004. The Authority also highlighted the broader interpretation of "manufacture" for exported goods as per the EXIM Policy and previous decisions by the CESTAT. The Authority allowed the appeal, citing a similar case where the appellant was eligible for a refund, leading to the conclusion that the refund claim should be allowed.

The Revenue contested the decision, arguing that since ground granulated blast furnace slag is not subject to excise duty, CENVAT credit should not have been availed on the inputs. However, the Tribunal found that the issue had been previously addressed by the Hon'ble High Court of Bombay in a similar case. The High Court held that under Rule 6 of the CENVAT Credit Rules, if the exempted products are exported, then the bar on availing credit does not apply. The High Court emphasized that the language of Rule 6(6)(v) allows for availing CENVAT credit on inputs used in the manufacture of final products being exported, even if those final products are otherwise exempt. Therefore, the Tribunal upheld the decision of the 1st Appellate Authority, stating that the respondent is entitled to the refund of the amount. The appeal was deemed meritless and rejected accordingly.