CENVAT refund on exempt clearances denied where Rule 57AD(2)(b) reversal applied and the circular was inapplicable.

Refund of the amount debited in the CENVAT register was held inadmissible where a car was cleared under an exemption notification and the clearance was expressly subject to Rule 57AD(2)(b) of the Central Excise Rules, 1944. The circular relied on was treated as inapplicable because it covered a period when no exemption operated. Since the goods were exempted, the 8% debit of assessable value was treated as correctly made in law, and the argument based on differential treatment of dutiable and exempt goods from common inputs was rejected. The refund claim was accordingly rejected.

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Issues: Whether refund of the amount debited in the CENVAT register was admissible when the car was cleared without payment of excise duty under an exemption notification and the requirement of reversal under Rule 57AD(2)(b) applied.

Analysis: The car was cleared under Notification No. 3/2001 granting exemption from central excise duty, and the permission to clear it was expressly subject to compliance with Rule 57AD(2)(b) of the Central Excise Rules, 1944. In that situation, the circular relied upon was held inapplicable because it governed a period when there was no exemption. As the clearance was of an exempted good, the debit of 8% of the assessable value was treated as correctly made in law, and the plea based on differential treatment of dutiable and exempt goods from common inputs was rejected.

Conclusion: The refund claim was not admissible and the rejection of the claim was upheld.

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