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2023 (6) TMI 367 - AT - Central ExciseCENVAT Credit - inputs used commonly in the manufacture of excisable goods, exempted goods and non-excisable goods - amount of 10% of the value of the exempted goods paid but no payment in case of non-excisable goods manufactured and exported by them under bond/LUT - Rule 6(5) of CENVAT Credit Rules, 2004 - HELD THAT - The issue is no longer res integra being decided by the Hon ble Bombay High Court in the case of Repro India 2007 (12) TMI 209 - BOMBAY HIGH COURT where it was held that As noted earlier the object and purpose of Rule 6(6) of Cenvat Credit Rules, 2004 is to promote the policy of the Government that the benefit of duty paid on input is available as credit in respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term excisable goods instead of exempted goods is that the term 'exempted goods' may not cover the dutiable goods which are exported under bond. Therefore, in order to widen and cover both dutiable and exempted goods exported under bond, Rule 6(6) of Cenvat Credit Rules, 2004 uses the expression excisable goods . Hon ble High Court of Himachal Pradesh in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DRISH SHOES LTD. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT has held that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to rule 6(1), as contained in 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. The High Courts and Tribunal have been consistent in holding that credit of inputs used in exempted goods exported under bond/LUT or otherwise cannot be denied to the assessee in terms of Rule 6(6)(v) of Cenvat Credit Rules. 2004 and that it is not the intention of the Government to export Taxes. Further, we find that the situation would not alter even if non-excisable goods are manufactured by using dutiable inputs and are subsequently exported. Appeal not maintainable and is dismissed.
Issues:
The issues involved in the judgment are the violation of Rule 6 of CENVAT Credit Rules, 2004 by the appellant and the denial of CENVAT credit on inputs used in exempted goods exported under bond/LUT. Violation of Rule 6 of CENVAT Credit Rules, 2004: The appeal challenged the order passed by the Commissioner of Central Excise, Rohtak, regarding the appellant's alleged violation of Rule 6 of CENVAT Credit Rules, 2004. The Department contended that the appellant, engaged in manufacturing and exporting medicaments, did not reverse CENVAT credit on inputs used in the manufacture of non-excisable goods nor paid the required amount equal to 10% of the value of goods cleared for export under bond/LUT. A show cause notice was issued, which was dropped by the Adjudicating Authority but reviewed by the Committee of Chief Commissioner, leading to the appeal by the Revenue. Interpretation of Rule 6(6) of CENVAT Credit Rules, 2004: The Tribunal analyzed the provisions of Rule 6(6) of CENVAT Credit Rules, 2004 in light of previous judgments. The Hon'ble Bombay High Court and Tribunal decisions were cited, emphasizing that the term "excisable goods" in Rule 6(6) is wider than "exempted goods," covering both dutiable and exempted goods exported under bond. The High Court of Himachal Pradesh's ruling further clarified that the exception clause in Rule 6(6) applies to all excisable goods, allowing CENVAT credit on inputs used in goods chargeable to nil duty and subsequently exported. Consistency in Judicial Interpretation: The judgment highlighted the consistent stance of High Courts and Tribunals in upholding the eligibility of assessees to claim CENVAT credit on inputs used in exempted goods exported under bond/LUT. It was emphasized that denying such credit would go against the intention of the Government and lead to the export of taxes. The conclusion was drawn that even if non-excisable goods are manufactured using dutiable inputs and exported, the denial of credit is unwarranted. Consequently, the appeal by the Revenue was dismissed based on the established legal interpretations. Separate Judgment: No separate judgment was delivered by the judges in this case.
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