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TMI Blog2008 (7) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by Jubiliant Engineering Ltd. (Jubiliant), are directed against the Orders in Appeal No. 113/07 dated 20-12-07 and No. 139/06 dated 24-11-06 respectively. Both GTN Jubiliant manufacture industrial valves and components. Both were DTA units till 18-11-04 and became EOUs on 19-11-04. The appellants had received indigenous inputs and had paid excise duty. They took credit of duty paid. During the material period in each case, the appellants exported manufactured goods and filed refund claims for the credit involved under Rule 5 of Cenvat Credit Rules 04. Refund claims were rejected. The department held that the EOUs were not entitled to take credit of duty paid on inputs or the credit balance when they converted from DTAs. Jubiliant was not entitled to balance 50% of credit of duty paid on capital goods received in the previous fiscal when it was a DTA unit. The details are as follows : (i) Appeal No. E/492107 of GTN GTN challenges Order-in-Appeal No. 34/2007-C.E., dated 23-4-07. The refund claims filed in terms of Rule 5 of the CENVAT Credit Rules, 2004 (CCR) and Notification No. 11/02 dated 1-3-02, by GTN were rejected on the ground that the EOU had exported goods exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund claimed for credit accumulated was not admissible. (iv) Appeal No. E/22/07 of GTN The appeal is directed against Order-in-Appeal No. 134/06 dated 6-11-06. The Commissioner (Appeals) relied on EXIM Policy and Customs Circular No. 77/99-Cus. dated 18-11-99 and held the EOU was not eligible for Cenvat credit prior to 6-9-04 when Notification No. 18/04 was issued. It was held that GTN was not eligible to take Cenvat credit as the final products manufactured by EOU were exempted vide Notification No. 24/03. Order-in-original had demanded Rs. 20,81,285/- being wrongly availed credit and Rs. 16,44,454/- being duty due on DTA clearances discharged using such credit. Interest was also demanded. Penalty of Rs. 20,81,285/- was imposed under Rule 15 of CCR 04. The impugned Order-in-Appeal No. 134/06 dated 6-11-06 sustains the above order of the original authority. (v) Appeal No. E/116/07 of Jubiliant The appellants had credit balance when the DTA was converted into EOU on 19-11-04. During 2004-05 Jubiliant availed Cenvat credit of inputs received to the tune of Rs. 20,14,316/-. It used an amount of Rs. 13,92,470/- out of this credit to clear goods in the DTA. It had also take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dure for sanction of refund of unutilized credit/rebate claims in cases of export by certain categories of exporters. Category 4(f) was EOUs. 3. It is submitted that refund claims were rejected on the sole ground that the appellants were not eligible for Cenvat credit as the goods were exempted vide Notification No. 24/2003-C.E. dated 31-3-03. Duty was not paid as the goods were exported under bond and not because they had been exempted. In such a situation, Cenvat credit could not be denied. Appellants relied on the following case law. 1. Medispan Ltd. v. CCE, Chennai - 2004 (178) E.L.T. 848 (Tri.-Chen.) 2. Norris Medicines Ltd. v. CCE, Surat -I - 2000 (125) E.L.T. 851 (Tri.). There was no dispute that unutilized Cenvat credit could be claimed as refund when the finished goods were exported as per the procedure laid down in Central Excise Rules, 2002 (CER) vide Notification No. 11/2002-C.E. (N.T.) 1-3-02. As per para 4 of CBEC Circular No. 54/04-Cus., dated 13-10-2004, EOUs could procure the goods on payment of duty and take Cenvat credit. Credit could be utilized by EOU as per CCR, 2004. It was clear that EOU could utilize such credit for DTA clearances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame could be claimed as refund in terms of Rule 5 of CCR, 04. In the instant cases, therefore, the appellants had taken credit in accordance with the statutory provisions. 6.1 Rule 5 of CCR, 04 provides for refund of credit accumulated on account of export of finished goods without payment of duty. Such credit which cannot be utilized for any reason can be claimed as refund. The refund claims filed were therefore admissible as per Rule 5 of CCR. In Norris Medicines Ltd. v. CCE C, [2003 (56) RLT 353 (CEGAT)], the Tribunal had observed as follows: "4. After hearing rival submissions and perusal of the case records, I find the goods in question have indeed been exported under bond. Therefore, the benefit of Modvat credit under Rule 57F(13) cannot be disallowed. Moreover, it is the policy of the Government to encourage export, and neither the exported products nor the inputs used in the export product are required to suffer the levies imposed on goods taken for home consumption. 5. Not only exports are allowed to be made without payment of duty under bond or under claim of rebate of duty paid but there are schemes to either allow rebate or drawback of duty on inputs used ..... X X X X Extracts X X X X X X X X Extracts X X X X
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