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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 ..... ts 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 exempted under Notification No. 24/03 dated 31-3-03. The amount involved Rs. 40,75,335/- represents credit accumulated on account of exports made by the EOU during the period 2005-06. The authorities held that the assessee was not eligible to avail the credit on inputs used in the manufacture of final products exported as the goods exported were exempt. Therefore refunds claimed were not admissible though goods were exported under B17 bond. (ii) Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actured 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 taken credit of balance 50% of the capital goods credit availed by it in the previous fiscal when it was a DTA unit. The original authority decided that the appellant was not entitled to Cenvat credit it had taken. It was not eligible to take the balance in the accounts of the DTA at the time of conversion including 50% of the credit relating to the capital goods installed in the EOU. Rule 10 of CCR allowed transfer of balance credit only in situations specified the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 or claim refund as per Rule 5 of CCR. In Tata Tea Limited v. CCE, Cochin reported in 2006 (200) E.L.T. 81 (Tri.-Ban.), it was held that Rule 5 of CCR, 2002 provided for refund of Cenvat credit taken on any inputs used in the manufacture of final products, which were cleared for export. There was nothing in Rule 5 of CCR which stated that, the same was not applicable to 100% EOUs. In the case of M/s. Malbrows Stone Exports v. CCE reported in 2007- TIOL-1282-CESTAT-Del. the Tribunal had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the export product or allow manufacture in bond without payment of duty on inputs. The interpretation placed by the lower authorities on Rules 57C, 57CC and Rule 57F is clearly against Government policy to encourage export and free export products from domestic levies. I have, therefore, no hesitation in setting aside the orders of the lower authority and allowing the appeal. Before parting with the case, it is suggested that the rule making authority should clarify the rules and issue clear cut directions to the fie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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