2019 (2) TMI 258 - AT - Central Excise

CENVAT Credit - inputs contained in export goods - goods have been physically exported outside India - manufacturer Exporter could not realize Foreign Exchange due to the rejection of the export goods - Rule 6(6) of Cenvat Credit Rule, 2004 - Held that - It is observed that the goods have been admittedly exported out of India. After receipt of the goods by the foreign buyer, goods were found rejected then same was remained in that Country. Due to the rejection the payment towards such export could not be made. As per the facts of the present case the goods have been taken out of India to a place outside of India . Therefore, the supply of the goods by the appellant clearly qualifies as export of goods . Once the export of goods is not under dispute, in terms of Rule 6(6) of Cenvat Credit Rules, 2004, the appellant is entitled for the Cenvat credit. Moreover in the Cenvat Credit Rules, 2004 in respect of export goods there is no condition stipulated that against the export, the Foreign Exchange remittance should be received in order to allow the Cenvat Credit. The appellant are clearly entitled for the Cenvat Credit in respect of inputs contained in export goods - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether Cenvat Credit can be denied to a manufacturer exporter who could not realize Foreign Exchange due to rejection of export goods despite physically exporting them outside India.

Analysis:
The appellant argued that Cenvat Credit is admissible for exported goods under Rule 6(6) of Cenvat Credit Rules, 2004, without the condition of receiving Foreign Exchange. The Tribunal referred to various judgments supporting this argument. The Revenue reiterated the findings of the impugned order denying Cenvat Credit due to non-receipt of Foreign Exchange against the exported goods.

Upon careful consideration, the Tribunal observed that the lower authorities denied Cenvat Credit solely because Foreign Exchange remittance was not received, despite the goods being physically exported. Rule 6(6) of Cenvat Credit Rules, 2004 allows Cenvat Credit for goods cleared without duty payment for export. The Tribunal emphasized that if goods are exported out of India, Cenvat Credit is permissible, regardless of Foreign Exchange receipt.

The Tribunal highlighted that the definition of export goods involves taking goods out of India to a place outside India, which was satisfied in the present case. Referring to previous cases, the Tribunal emphasized that the condition of receiving export proceeds is not stipulated in the Cenvat Credit Rules for export goods. Citing a specific case, the Tribunal reiterated that denial of refund based on non-receipt of export proceeds is not sustainable.

Considering similar cases, the Tribunal concluded that the appellant is entitled to Cenvat Credit for inputs contained in export goods. Therefore, the impugned order denying Cenvat Credit was set aside, and the appeal was allowed.

The judgment underscores that Cenvat Credit for export goods should not be denied based on non-receipt of Foreign Exchange, especially when the goods have been physically exported outside India. The Tribunal's analysis of relevant rules and precedents establishes the entitlement of the appellant to Cenvat Credit in such cases, emphasizing the importance of adherence to legal provisions and principles in tax matters.