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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 ..... 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. Conclusion - The exempted goods cleared for export under bond are eligible for Cenvat Credit, and reversal under Rule 6(3) is not justified. The Appellant is not required to pay an amount under Rule 6(3) of Cenvat Credit Rules in respect of the goods exported under Notification No. 4/2006-CE in terms of Rule 6(6)(v) of Cenvat Credit Rules, 2004. The impugned order is not sustainable - Appeal allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C. L. MAHAR, MEMBER (TECHNICAL) Mrs. Manasi Patil, Advocate for the Appellant Shri Mihir Rayka, Additional Commissioner (AR) for the Respondent ORDER M/s. Macleods Pharmaceuticals Ltd. (Unit-II), Plot No. 24 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable in their case. 1.3 Being aggrieved by the order-in-original the appellant filed an appeal before the Commissioner (Appeals). The learned Commissioner (Appeals) also concurring with the view of the adjudicating authority upheld the orderin-original and rejected the appeal therefore the appellant is before us. 2. Mrs. Manasi Patil, learned counsel appearing on behalf of the appellant at the outset submits that as regard the availability of Cenvat Credit against the goods cleared under exemption Notification No. 4/2006-CE dated 01.03.2006, in the appellant s own case it was held by this tribunal that the appellant was not required to pay an amount under Rule 6(3) of Cenvat Credit rules in terms of Rule 6(6)(v) of Cenvat Credit Rules, 2004. Therefore, the issue is no longer res-integra and the amount was reversed by the appellant is liable to be refunded to the appellant. She placed reliance on the following judgments: Macleods Pharmaceuticals Ltd. (2024) 17 Centax 30 (Tri.-Ahmd) Macleods Pharmaceuticals Ltd. 2019-TIOL-2868-CESTAT-AHM Macleods Pharmaceuticals Ltd. Order-in-Original No.DMN- II/AC/30/19-20/R dated 11.2.2020 Macleods Pharmaceuticals Ltd.- Order-in-Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and either not to pay the duty nor clear the goods under bond for export, on the pretext that the exemption is unconditional and absolute so appellant was supposed to avail the exemption without any option. 4.2 Firstly, for the ease of reference we reproduce the relevant protion of the Notification No. 4/2006-CE and the relevant entry where under the goods of the appellant are under exemption: Exemption and effective rate of duty for specified goods of Chapters 25 to 49 In exercise of the powers conferred by sub-section (1) of section SA of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a manufacturer or producer of final products and a [provider of output service]]. [(1) The CENVAT credit shall not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service as is used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services and the credit not allowed shall be calculated and paid by the manufacturer or the provider of output service, in terms of the provisions of sub- rule (2) or sub-rule (3), as the case may be: Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. Explanation 1 . - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2 . - Value of non-excisable goods for the purposes of this rule, shall be the invoice va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods or passengers by rail, the amount required to be paid under clause (i) shall be an amount equal to two per cent. of value of the exempted services. Explanation 1 . If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation 2 . No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. Explanation 3 . For the purposes of this sub-rule and sub-rule (3A),- (a) non-exempted goods removed means the final products excluding exempted goods manufactured and cleared upto the place of removal, (b) exempted goods removed means the exempted goods manufactured and cleared upto the place of removal; (c) non-exempted services means the output services excluding exempted services.) [(3A) ----------------------------------------------------------------------- [(4) ------------------------------------------------------------------------- [(5) ---------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the taxable services are provided, without payment of service tax, to a unit in a Special Economic Zone or to a developer of a Special Economic Zone for their authorised operations or when a service is exported (or when a service is provided or agreed to be provided by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India.] (8) For the purpose of this rule, a service provided or agreed to be provided shall not be an exempted service when:- (a) the service satisfies the conditions specified under rule 6A of the Service Tax Rules, 1994 and the payment for the service is to be received in convertible foreign currency; and (b) such payment has not been received for a period of six months or such extended period as maybe allowed from time-to-time by the Reserve Bank of India, from the date of provision :) (Provided that if such payment is received after the specified or extended period allowed by the Reserve Bank of India but within one year from such period, the service provider shall be entitled to take the credit of the amount equivalent to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) xxxxxx (v) cleared for export under bond, in terms of provisions of the Central Excsie Rules, 2002. 10. Rule 6(6)(v) of the 2004 Rules provides that the provisions of sub-rules (1), (2), (3) and (4) of Rule 6, shall not be applicable in case the excisable goods removed without payment of duty are: (i) xxxxxx (ii) xxxxxx (iii) xxxxxx (iv) xxxxxx (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002. 11. The only difference between the Rules of 2002 and 2004 is that while in case of 2002 rules, exception clause contained in sub-rule (5) of Rule 6 was applicable in case of only exempted goods, while exception clause contained in sub-rule (6) of Rule 6 of 2004 rules, applies both to exempted goods, as also goods subject to duty, because the term used in sub-rule (6) is excisable goods and not exempted goods , as was the case in Rules of 2002. 12. Reference has been made hereinabove to the Rules of 2002, as also 2004, because from the record, it cannot be made out which rules should be applicable. Rules of 2002 were applicable in respect of inputs or capital goods received in the factory after 1st day of March, 2002. They remained in force till t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 anly 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 (6) 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) E.LT. 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 Rule 6(6) of CENVAT Credit Rules, 2004, has held that expression excisable goods is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to CERA since the goods are even otherwise wholly exempted they cannot be exported under Rule 13. In this connection the following would indicate that even exempted goods can be exported in accordance with the provisions of Rule 13. Rule 13 provides that the Central Government may by Notification in Official Gazette permit export of specified goods subject to safeguards, conditions and limitations. In the notification issued under Rule 13, the Government has specified all excisable goods to be eligible for export under bond in terms of Rule 13. The Notification does not make any distinction between the dutiable and exempted goods nor debars the exempted goods from export under Rule 13. Exempted goods are excisable as having been manufactured and covered under Schedule to CETA 1985 and as such are eligible to be exported under Rule 13. As per the Board's Circular No. 471/37/99-CX dated 20-7-99, even the manufacturers of goods attracting nil rate of duty or wholly exempted goods can obtain registration under Rule 174 for the purpose of exporting their goods. Obviously, such manufacturer can, after obtaining registration as permitted vide aforesaid circular, export their goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04. The relevant portion of Rule 6(6)(v) reads as under :- (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 (ii) .. (!!!) .. (iv) (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002. The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted products are exported outside India the provisions of Rule 6(6)(v) of the Cenvat Credit Rules are applicable. Therefore, the bar provided under Rule 6(1) and the liability created under Rule 6(3)(b) of the Cenvat Credit Rules, 2004 are not attracted. By denying to the petitioner from exporting the printed books under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. In our opinion this is wholly impermissible. The provisions as now contained in Rule 6 of the Credit Rules, 2004 were contained in Rules 57C and 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt. 8. The Cenvat credit is allowed n (sic) the duty paid on inputs to mitigate the effect of double taxation of levying duty on inputs as also on the final product. If, however, the exempted final product is exported it calls for a special relaxation/dispensation to make the goods of the country internationally competitive. As an illustration suppose a final product like tractor is otherwise exempted from excise duty even for domestic consumption and such tractors are exported. The various inputs like engines, etc., used in the tractor may have suffered excise duty. The intention is not to export taxes but only to export the goods. If the inputs like engine going into the manufacture of export commodity namely tractors are subject to excise duty, the Indian manufacturer of tractors becomes internationally uncompetitive. This appears to be the object behind the Government enacting special scheme to ensure that the duty is not levied even on inputs going to the export products. Rule 6(6)(v) has been consciously and expressly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products are exempt from payment of duty. In this context the Revenue itself has accepted that under the provisions of Cenvat Credit Rules, 2002 there were provisions for removal of exempted goods under bond but the same was not available with effect from 9th September, 2004 under Cenvat Credit Rules, 2004, We may reproduce Rule 6(5) of the Cenvat Credit Rules, 2002 which reads as follows:- (5) The provisions of sub-rule (1), sub-rule (2), sub-rule (3) and sub-rule(4) shall not be applicable in case the exempted goods are either - (i) cleared to a unit in a free trade zone; or (ii) cleared to a unit in a special economic zone; or (iii) cleared to a hundred per cent export oriented undertaking; or (iv) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (v) 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 GSR 602(E) dated the 28th August, 1995; or (vi) cleared for export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. since the car is cleared without payment of duty under Rule 6(5) of Cenvat Credit Rules, 2002. It could be argued that it covers only the exempted goods exported and not dutiable goods exported. In order to cover such a situation also, Rule 6(6) of Cenvat Credit Rules, 2004 used the expression 'excisable goods' which is wider to include both dutiable as well as exempted goods. 10. In our opinion therefore, the petition will have to be allowed. The Petitioners are entitled to remove the goods on furnishing the bond as set out in Annexure 16 in Form B-1 of the Central Excise Manual. Rule mode absolute accordingly. There shall be no order as to costs. 4.5 As regards the goods cleared for export under bond it is undisputed that the appellant have consciously cleared the goods under Bond/ LUT. The LUT has been accepted by the department officers, the export consignments have been assessed accepting the clearances under Bond/LUT. In such case in terms of Rule 6(6)(v) of Cenvat Credit Rules, 2004 the provision of sub Rules (1), (2), (3) and (4) shall not be applicable in cases the goods removed without payment of duty, therefore in case of goods cleared under Bond/LUT also th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RF Ltd. (c) 2000 (121) ELT 557 (T) - Steelco Gujarat (d) 1999 (114) ELT 618 (T) - JCT Ltd. (e) 2000 (118) ELT 783 (T) - Alpha Drug India Ltd. (f) 1996 (82) ELT 256 (T) - Hunsur Plywood Works 4.8 Without prejudice to the above findings, we further find that in any case Cenvat credit cannot be denied on the inputs in case the finished goods wherein such inputs were used, exported out of country. Various mechanisms were provided for giving relief of input duty such as drawback, procurement of input without payment of duty under Notification No. 43/2001-CE(NT), rebate of duty of inputs, in terms of Rule 18 of Central Excise Rule 2012, refund of Cenvat of input used in export goods in terms of Rule 5 of Cenvat Credit Rules. Under all this scheme government has ensured that the input used in the manufacture of export goods should not suffer duty or if at all any duty is paid the same should be refunded. In other words, in the overall policy for export of goods, neither the duty on inputs nor the duty of finished goods should be exported. With these objective if the demand under Rule 6(3) is made, all these schemes which is with the objective that no duty should be charged on input will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustain. Accordingly, the penalty is set aside. 5. As per our above discussion and findings, the demand under Rule 6(3) of Cenvat Credit Rules, 2004 in the impugned order is not sustainable on merit as well as on limitation. Hence, we set aside the impugned order and allow the appeals. From the above detailed order in the appellant s own case it can be seen that the appellant is not required to pay an amount under rule 6(3) of Cenvat Credit Rules in respect of the goods exported under Notification No. 4/2006-CE in terms of rule 6(6)(v) of Cenvat Credit Rules, 2004. Therefore in the present case since the appellant have paid the amount which is otherwise not payable they are clearly entitled for the refund of same. In the order of the authorities below it was contended that the appellant have reversed the amount under rule 6(3) which is not excise duty therefore the refund of the same is not under section 11B of Central Excise Act, 1944, for this reason also the refund is not admissible. In this regard we find that the appellant have reversed the Cenvat Credit amount in terms of rules 6(3) therefore claiming refund of the same amount is nothing but seeking a credited of the Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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