2025 (2) TMI 518 - AT - Central Excise

Refund/Rebate claim - denial of refund on the ground that appellants exported goods u/r 19 of Central Excise Rules 2002 under Bond since the finished product is chargeable to NIL rate of duty for export CENVAT credit is not admissible in terms of Rule 6(6)(vi) of CENVAT Credit Rules 2004 - HELD THAT - The issue is squarely covered by the judgment in the case of M/s Repro India Ltd. 2007 (12) TMI 209 - BOMBAY HIGH COURT and M/s Drish Shoes Ltd. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT wherein it was held that CENVAT credit is admissible even if the raw material is utilized in the manufacture and export of exempted goods. Hon ble Apex Court in COMMISSIONER OF CENTRAL EXCISE CHANDIGARH VERSUS M/S DRISH SHOES LTD. 2016 (7) TMI 1415 - SC ORDER the judgment of Hon ble High Court of Himachal Pradesh in the case of M/s Drish Shoes. The principle adopted by the Hon ble Courts was that goods are to be exported and not the taxes. Learned Authorized Representative for the appellant-Revenue submits that learned Commissioner should not have relied upon M/s Drish Shoes Ltd. as the SLP filed by the Revenue against the order of the Hon ble High Court was pending before the Hon ble Apex Court. Hon ble Apex Court did not stay the operation of the Hon ble High Court s order and therefore to that extent there is no infirmity in the order passed by the learned Commissioner. Conclusion - CENVAT credit is admissible even if the raw material is utilized in the manufacture and export of exempted goods. The refund is allowed. The appeal filed by the Revenue is dismissed.

Summary

The Appellate Tribunal considered the case of M/s Surya Pharmaceuticals Ltd., which had filed refund/rebate claims under Rule 5 of the CENVAT Credit Rules, 2004 for the quarters April 2008 to December 2008. The Department rejected the refund claims amounting to Rs. 5,17,41,226/- as the appellants exported finished products under Bond at a NIL rate of duty, making them ineligible for CENVAT credit under Rule 6(6)(vi) of the CENVAT Credit Rules, 2004. The Commissioner (Appeals) later overturned the rejection and ordered the refund to be granted to the appellants, leading the Revenue to appeal against this decision.The main issue revolved around whether the appellants were entitled to the refund considering the exemption of the final product menthol from Central Excise Duty during the relevant period. The Revenue argued that the refund should not be granted based on the pending Special Leave Petition filed by them and the specific conditions outlined in the relevant notifications and circulars. They contended that the inputs used exclusively in the manufacture and export of exempted finished goods did not qualify for CENVAT credit under Rule 6 of the CENVAT Credit Rules.The Tribunal, after noting the absence of the respondents during the hearings, proceeded to analyze the case based on the available records and the submissions of the Revenue's Authorized Representative. They highlighted the Commissioner's reliance on previous judgments and circulars to support the appellants' claim for refund. The Tribunal emphasized that the language of the relevant rules and notifications did not impose conditions beyond what was explicitly stated, rejecting the argument that the waste generated during the manufacturing process should impact the refund eligibility.The Tribunal referenced the judgments in the cases of Repro India Ltd. and Drish Shoes Ltd., which established that CENVAT credit could be claimed even when raw materials were used in the manufacture and export of exempted goods. They noted that the Apex Court had upheld the decision of the High Court in the Drish Shoes case, indicating that the goods themselves were to be exported, not the taxes. The Tribunal also pointed out that the Apex Court had dismissed the Revenue's Special Leave Petition, confirming the validity of the High Court's order and the appellants' entitlement to the refund.Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner's decision to grant the refund to M/s Surya Pharmaceuticals Ltd. The judgment highlighted the importance of adhering to the explicit provisions of the law and established precedents in determining the eligibility for CENVAT credit and refunds in cases of exported exempted goods.