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TMI Blog2025 (1) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the exempted products, the Appellant were manufacturing certain products chargeable to duty under Central Excise Act, 1944. By virtue of availment of said notification, the goods cleared by the Appellant for home clearances were exempted from payment of central excise duty. The Appellant was maintaining a common account for exempted as well as dutiable products and availing Cenvat credit on the input and input services used in or in relation to manufacture of exempted as well as dutiable products under Rule 6(3) of Cenvat credit rules, 2004. Accordingly, in the present case when the exempted products are cleared for export, the Appellant paid an amount equal to 5.15% /6.18% by debiting from common Cenvat credit account, under Rule 6(3) of Cenvat Credit Rules 2004, of the value of exempted products exported out of India from its Cenvat credit account. 1.2 After reversal of Cenvat Credit in terms of Rule 6(3) of Cenvat Credit Rules, 2004. The appellant realized that as per the Rule 6(6)(v) of Cenvat Credit Rules, 2004. The appellant are eligible for Cenvat Credit even if the goods are cleared without payment of duty for export therefore, the appellant filed refund claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not applicable in their case hence, the appellant have rightly reversed the Cenvat amount in terms of Rules 6(3) of Cenvat Credit Rules 2004, consequently there is no question of refund of the said amount. He placed reliance on the following judgment: * 2017 (358) ELT 664 (Tri.-Mum) - CCE, Nashik Vs. Nashik SSK Ltd * 2018 (362) ELT 492 (Tri.-Hyd) - CCE, TIrupati Vs. SNJ Sugars & Products Ltd 4. We have carefully considered the submissions made by both the sides and perused the records. We find that in the present case the appellant have reversed the amount in terms of Rule 6(3) in respect of the exempted goods under Notification No. 4/2006-CE and cleared for export and for the said reversal the appellant filed the refund claim. On the identical issue in the appellant's own case where the revenue had demanded the amount under rule 6(3) in respect of the similar nature of export this tribunal vide order no. 11450-11451/2023 dated 07.07.2023 held that the appellant was not required to pay an amount under rule 6(3) of Cenvat Credit Rules even though the goods are exempted under Notification No. 4/2006-CE for the reason that the said notification is conditional one. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise specified. S. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No 54 28, 29 or 30 The bulk drugs or formulations specified in List 3 Nil - 59 30 Formulations manufactured from the bulk drugs specified in List 1. Explanation. - For the purposes of this notification, the expression "formulation" means medicaments processed out of or containing one or more bulk drugs, with or without the use of any pharmaceuticals aids (such as diluent, disintegrating agents, moistening agent, lubricant, buffering agent, stabiliser or preserver) which are therapeutically inert and do not interfere with therapeutical or prophylactic activity of the drugs, for internal or external use, or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply. Nil - From the reading of the above notification it can be seen that in both the entry the exemption was granted to not all the goods of the chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 658(44) of the Finance Act, 1994 (provided that such activity has used Inputs or input services]. Explanation 4. - Value of such an activity as specified above in Explanation 3, shall be the invoice/agreement/contract value and where such value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Finance Act, 1994 and the rules made thereunder.] ((2) A manufacturer who exclusively manufactures exempted goods for their clearance upto the place of removal or a service provider who exclusively provides exempted services shall pay the whole amount of credit of input and input services and shall, in effect, not be eligible for credit of any inputs and input services.) [(3) (a) A manufacturer who manufactures two classes of goods, namely:- (i) non-exempted goods removed; (ii) exempted goods removed; or (b) a provider of output service who provides two classes of services, namely:- (i) non-exempted services; (ii) exempted services, shall follow any one of the following options applicable to him, namely:- [(i) pay an amount equal to six per cent. of value of the exempted g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or their authorised operations; 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 [(iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of Notification No. [12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012); or) (v) cleared for export under bond in terms 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; or] [(vii) all goods which are exempt from the duties of customs leviable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Cenvat Credit Rules, 2004 shall arise only in case where the input or input service is commonly used in the manufacture of dutiable and exempted goods. As opined by us herein above since appellant have not availed the exemption Notification No. 4/2006-CE question of application of rule 6(3) does not apply. Moreover in respect of the goods cleared under claim for rebate the appellant have admittedly paid the excise duty. Once the excise duty has been paid the demand under rule 6(3) shall not be sustainable. 4.4 without prejudice we also find that in catena of judgments, it has been held that even though if on any product duty is not payable for any reason but the assessee paid the duty the Cenvat Credit cannot be denied consequently the provision of Rule 6(3) of Cenvat Rules, 2004 will not be applied. Some of the judgments are given below:- (a) In the case of Drish Shoes Ltd - 2010 (254) ELT 417 (HP), the Hon'ble High Court passed the following judgment:- "8. It is not in dispute that the respondent is engaged in the manufacture of finished leather and that it had exported manufactured leather as claimed by it. The only question is whether under the CENVAT Credit Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted between August, 2004 and March, 2005 and it was not clear as to when the inputs were received, so reference has been made to both the sets of rules. As already noticed, the provisions of both the rules are similar, except that under the Rules of 2002, exception contained in sub-rule (5) of Rule 6 was applicable only to the exempted goods, while under the Rules of 2002, exception applies to all excisable goods, irrespective of the fact whether they are exempted or subject to levy of duty. 13. Assistant Commissioner file, rejecting the claim of the respondent, held that since the finished leather exported by the respondent was exempt from duty, no bond or Letter of Undertaking was required to be furnished and the furnishing of bond by the respondent was only a device to claim CENVAT credit under the CENVAT Credit Rules. He took the view that Rule 6(1) clearly stated that CENVAT credit was not permissible in respect of exempted goods. 14. The Commissioner (Appeals), while accepting the appeal and reversing the order of Assistant Commissioner, held that Assistant Commissioner had not taken holistic view of the matter and allowed himself to be misled by reading only a few pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. Question No. 1 is answered accordingly. 21. As regards question No. 2, it is clear from a bare reading of Rule 5 of CENVAT Credit Rules, 2004 that a manufacturer, who exports the final products which are exempt from duty, can claim refund of CENVAT. So, this question is also answered against the appellant. 22. In view of the aforesaid answers to the questions of law, appeal is dismissed." (b) In the case of Repro India Ltd 2009 (235) ELT 614 (Bom.), the Hon'ble Bombay High Court has passed the following judgment:- "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 band 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty and rebate claimed under Rule 12." Thus the Ministry of Finance vide letter dated 8th November, 2001 has specifically 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.LT. (157) 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjective to ensure that duty is not levied even on inputs going to the export products. This method of adjustment, both from the point of Government and the 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 6would 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. Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort under bond in terms of the provisions of the Central Excise Rules, 2002." We may reproduce Rule 6(6) of the Cenvat Credit Rules, 2002, which read as under:- "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) 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 (v) 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 Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of goods cleared under Bond/LUT also the demand under Rule 6(3) of Cenvat Credit Rules, 2004 will not sustain. The contention of the revenue is that during the relevant time under the Notification No. 42/2001-CE(NT) dated 26.06.2001 there was condition (1) (iv) of the notification, the same is reproduced below: "(iv) that export of excisable goods which are chargeable to nil rate of duty or are wholly exempted from payment of duty, other than goods cleared by a hundred per cent export- oriented undertaking, shall not be allowed under this notification;)" 4.6 The revenue has interpreted that as per the above condition the appellant was not supposed to clear the goods under Notification No 42/2001-CE(NT) dated 26.02.2001 therefore the clearance of goods cannot be treated as export under bond and consequently the benefit of Rule 6(6)(v) is not available to the appellant. We find that even though there is a condition in Notification No. 42/2001-CE(NT) but the fact in this case is the appellant have cleared the goods under LUT which was accepted by the revenue at the time of export therefore the clearance is clearly covered under Rule 6(6) (v) of Cenvat Credit Rules, 2004. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is with the objective that no duty should be charged on input will be defeated. For this reason also the duty paid on the inputs which is used in export goods cannot be demanded under Rule 6(3) of Cenvat Credit Rules, 2004. As the whole exercise is revenue neutral, for this reason also the demand under Rule 6(3) is not sustainable. As per our above discussion the demand under Rule 6(3) is not sustainable on various counts. 4.9 Without prejudice we also find that the appellant have contested strongly the demand on time bar. In this regard we find that the show cause notice dated 02-08-2012 was issued for the period April-2010 to March- 2011. Accordingly, the extended period of limitation was invoked. As per the undisputed fact the appellant was registered and were maintaining all the records such as RG-1 Central Excise invoices were issued under Rule 11 of Central Excise Rule, 2002 indicating export under form UT-1. 4.10 At the time of export, the appellant have been filing application for removal of goods for export in form ARE-1 wherein the tax Invoice showing exports under bond was made and the said ARE-1 were signed by Jurisdictional Central Excise authority as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of rules 6(3) therefore claiming refund of the same amount is nothing but seeking a credited of the Cenvat amount. It is a settled law that if any amount of Cenvat is reversed for any reason which is not liable to be reversed the same can be recredited in the Cenvat account if the amount is reversed from Cenvat account. If the said amount was reversed from the cash the appellant is entitled for the cash account. Therefore, the contention of the revenue that the present refund is not governed by Section 11B is not relevant in the facts in the present case. 4.1 As regard the learned AR Shri Mihir Rayka placed reliance on the judgments cited above, we find that in case of the judgment of Nashik SSK Limited (Supra) the tribunal has correctly held that amount reversed in terms of rule 6(3) of Cenvat Credit Rules, 2004 does not represents excise duty however, it was also held that if this amount was not liable to be reversed same can be allowed as recredit same in the manner as Cenvat Credit was allowed at the time of receipt of input/input service. Moreover, the case in the Nashik SSK limited was on the issue of time bar which is not in the present case. As re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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