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TMI Blog2007 (12) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... products namely packaged software, stationery books and printed books. The said credit is utilized for payment of duty on packaged software and stationery books. Refund in cash is claimed for credit which cannot be so utilized, to the extent it is attributable to printed books exported by it. The Assistant Commissioner of Central Excise, respondent No. 2 has accepted the Letter of Undertaking furnished by the petitioners on 17th August, 2006 vide his letter dated 29th August, 2006 and allowed the petitioners to clear all the dutiable goods (packaged software) as also excisable goods attracting Nil rate of duties (printed books), to be cleared under the said Form UT-1. 3. Thereafter the Assistant Commissioner of Central Excise, Belapur-III Division, respondent No. 2 by his letter dated 9th April, 2007 directed the petitioners that they should clear only dutiable goods such as packaged software under the aforesaid bond i.e. UT-1 executed by them. The Assistant Commissioner directed that the petitioners cannot clear exempted goods or goods chargeable to nil rate of duty namely printed books under the above bond which was reiterated by letter dated 16th April, 2007. The respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the petitioner has to follow the ARE-2 procedure for claiming refund of the duty on the contents of the exempted goods. These directions issued, it is stated, are as per law. An additional affidavit was filed by A.K. Prasad working as Commissioner of Central Excise, Belapur pursuant to the directions of this Court. It is set out therein, that in respect of the export bond/Letter of Undertaking is taken under Rule 19 of the Central Excise Rules, 2002 to protect the revenue in those cases where export does not take place but diverted for home consumption. The goods which are subject to nil rate of duty in Central Excise Tariff Rules are not required to execute any bond/Letter of Undertaking because there is no revenue implications. 5. The question for consideration is whether in respect of exempted goods for export, the inputs in respect of which are dutiable, can be cleared by giving bond under Rule 19 of the Central Excise Rules, 2002. For the purpose of our discussion some of the relevant Rules of the Central Excise Rules, 2002 to be considered, read as under:- "19(1) Any excisable goods may be exported without payment of duty from a factory of the producer or manufacturer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically clarified that even the exempted goods can be cleared for export under bond in terms of Rule 13 of the erstwhile Central Excise Rules, 1944, which is pari materia with Rule 19 of the Central Excise Rules, 2002. The Circulars issued by the Central Government are binding on the Central Excise Department. The Madras High Court in Tamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd. v. Assistant Collector of Central Excise, Erode, 1978 (2) E.L.T. (J57) has expressly held that the goods figuring in the Schedule to Central Excise Tariff Act for which duty specified is Nil are also excisable goods. This view has been approved by the Supreme Court in Wallace Flour Mills v. CCE, 1989 (44) E.L.T. 598 (S.C.). As such though the printed books attract nil rate of duty under Heading 49.01, of the First Schedule to the Central Excise Tariff Act, 1985 they are indeed excisable goods. If they are to be exported, Rule 19(1) read with Rule 19(3) of the Central Excise Rules, 2002 have to be complied with. 6. As noted earlier the defence of Revenue has been that as the goods otherwise attract nil rate of duty, therefore, no bond or undertaking is required. This overlooks the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. It dealt with the question whether 8% has to be paid on the sale price of exempted goods Under Rule 6(3)(v) of Cenvat Credit Rules, 2004, to 8% has been increased to 10%. The relevant portion of the Circular dated 8th November, 2001 reads as under :- "Further, it is now clearly and specifically mentioned in Rule 57AD(4) that the provisions relating to non-availability of Modvat credit and reversal @ 8% is not applicable in case the exempted goods are cleared for export under bond in terms of the provisions of Rule 13. In the new rule 57AD, it has been explicitly provided what was implicity in erstwhile rules 57C and 57CC. Further, the present rule 57AD(4) clearly goes on to show that the exempted goods are eligible to be exported under bond. To interpret otherwise will render the new rule 57AD(4) redundant. In view of the foregoing in this case the provisions of sub-rule 57C(1) are satisfied as stipulated under Rule 57C(2) as well as Rule 57CC(6)1 and there was no need to comply with the provisions of rule 57CC1). Therefore, it is clear that an amount of 8% of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is to allow the assessee to take Cenvat credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, Cenvat credit is refunded in cash. This appears to be the Scheme of Rule 5 of the Cenvat Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6(6)(v) of the Cenvat Credit Rules, 2004 to the effect that the bar created by Rule 6(1) will not apply for goods exported. Considering the conscious and express provisions contained in Rule 6(6)(v) for exported goods, to deny the permission to export under bond and/or to levy 10% on the value of the exported goods under Rule 6(3)(b) on the footing that the printed books exempt and, therefore, attract Rule 6(1) would be incorrect and completely nullify and frustrate Rule 6(6)(v). 9. We may also consider the various clauses of Rule 6(6) which would indicate that they relate to goods which are wholly exempt from duty. Rule 6(6)(i) relates to supply to SEZ. These are wholly exempted from duty vide Notification dated 19th October, 2001 and notification dated 22nd July, 2003. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - (i) cleared to a unit in a special economic zone; or (ii) cleared to a hundred per cent export oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995 number G.S.R. 602(E) dated the 28th August, 1995; or (vi) cleared for export under the items of the provisions of the Central Excise Rules, 2002; or (vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting." A perusal of the aforesaid Rules would clearly show that sub-rule (i) to (vi) are identical and the difference in Rule 6(6) of the Cenvat Credit Rules, 2004 and Rule 6(5) of the Cenvat Credit Rules, 2002 is not releva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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