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TMI Blog2024 (4) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... leather. Three show cause notices dated 04.08.2009, 30.10.2009 and 01.04.2010 were issued to the respondent alleging that they were not entitled to take cenvat credit on inputs used in the manufacture of dutiable and exempted goods exported without maintaining separate records of receipt and consumption of inputs of dutiable and exempted goods and they are required to reverse Cenvat credit @ 10% or 5% of value of exempted goods as per Rule 6(3)(i) in respect of inputs used in manufacture of goods exported. After following the due process, the adjudicating authority confirmed the demand and held that Rule 6(1) of Cenvat credit Rules stipulates that cenvat credit shall not be allowed on inputs which are used in the manufacture of exempted goods; that the Rule 6(2) envisages that where manufacturer avails cenvat credit in respect of inputs or input services which are used in manufacture of both dutiable and exempted final products, the credit should be taken only on that quantity of inputs which are intended for use in manufacture of dutiable goods and manufacturer is to maintain separate accounts for receipt, consumption of inputs/input services meant for use in dutiable and exempte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of non dutiable goods except in the circumstances mentioned in sub-rule(2) or (3) of Rule 6 of the Credit Rules. 6. On the other hand, Ld. Counsel for the respondent defended the impugned order and submits that the Original authority wrongly interpreted the Rule 6(6)(V) of Cenvat Credit Rules, 2004. He further submits that this issue is no more res integra and has been settled by various High Courts including the jurisdictional High Court of Punjab and Haryana in the case of Hind Rubber Factory Vs. UOI 1990 (48) ELT 363 (P&H), wherein, it has been held that excisable goods does not cease to be excisable goods on exemption being granted. He further submits that this decisions of Punjab and Haryana High Court has been held by the Hon'ble Apex Court as reported in 2000 (119) ELT A178 (SC). 7. He further submitted that the case of the respondent is squarely covered by the decision of the Bombay High Court in the case of Repro India Ltd. Vs. UOI 2009 (235) ELT 614 (Bombay) which held that bar provided under Rule 6(1) and liability created under Rule 6 (3)(b) not attractable where cenvat credit availed on inputs used in dutiable and exempted final products are exported. He further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely: (i) the manufacturer of goods shall pay an amount equal to ten per cent of value of the exempted goods and the provider of output service shall pay an amount equal to eight per cent** of value of the exempted services; or 5% vide Ntfn. No. 16/09 CE(NT) dt. 07.07.2009 6% vide Ntfn. No. 16/09 CE(NT) dt.07.07.2009 (4) & (5) ...... (6) The provisions 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) to (iv) ..... (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or 9. Further, we find that the issue involved in the present case is no more res integra and has been settled by the various High Courts in favour of the assessee. The Bombay High Court in the case of M/s Repro India Ltd. Vs UOI cited (Supra); after considering the scope and applicability of Rule 6 of Cenvat Credit Rules, has held as under: "A perusal of the aforesaid Rules would clearly show that sub-rule (i) to (vi) are identical and the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(6) of the Rules of 2004, and one of the exceptions is in respect of excisable goods, which are cleared for export under bond in terms of the provisions of Central Excise Rules, 2002. 17. Sub-rule (5) of Rule 6 of the Rules of 2002 was applicable only in case of exempted goods. That meant that the exception was not applicable in case of dutiable goods. It appears that this led to anomalous situations. For example, if the goods were dutiable and were exported, credit for CENVAT could not be claimed in respect of input of those goods, at least under the aforesaid exception clause. To overcome this kind of anomalous situations, exception clause contained in sub-rule (6) of Rule 6 of CENVAT Credit Rules, 2004 has been made applicable to all excisable goods. 18. Learned counsel for the appellant argued that term 'excisable goods used in sub-rule (5) of Rule 6 of 2004 Rules: meant only dutiable goods. Submission has been noticed only to be rejected. 19. A Division Bench of Bombay High Court in 2009 (235) ELT. 614 (Bom), Repro India Ltd. v. Union of India, while dealing with a similar situation and interpreting the provisions of Rule 6(5) of CENVAT Credit Rules, 2002 and Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sub-rule (1) of Rule 6 is a circumstance, where excisable goods are exported pursuant to the execution of bond, in terms of Central Excise Rules, 2002. 14. Therefore, on a plain reading, we see no difficulty in the assessee's case falling in the exception carved out in Rule 6(6)(v) of the 2004 Rules. The purpose, apparently, behind carving out of such exceptions appears to be, to neutralise the impact of the duties paid by the exporters, with regard to input tax, whether paid on goods or services. The objective obviously, is not to export duties, so as to provide much needed competitive edge to Indian exporter in foreign markets. 14.1 India is a party to the WTO regime and, therefore, it is permissible for it to neutralise duties on inguts whether in the form of goods or services. 15. Thus, having regard to the Rules, qua which we have rendered our view above, and the perceptible object as to why sub-rule (6) of Rule 6 of the 2004 Rules has been put in place, we are not inclined to interfere with the impugned judgment rendered by the Tribunal 16. Accordingly, the appeal of the Revenue is dismissed. The question of law, as framed, is answered in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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