2008 (9) TMI 754 - AT - Central Excise

Tribunal allows Cenvat credit for exports, overturns Commissioner's decision

The Tribunal ruled in favor of the appellant, allowing Cenvat credit on inputs used in manufacturing goods that were subsequently exported. The ... Cenvat/Modvat Issues:1. Rejection of Cenvat credit on inputs used in the manufacture of exported goods.2. Interpretation of Rule 6(5)(vi) of Cenvat Credit Rules regarding export of exempted goods.3. Applicability of bond requirement for export and its impact on Cenvat credit eligibility.Analysis:1. The case involved the rejection of Cenvat credit by the Revenue on inputs used in the manufacture of PP bags and HDPE ropes, which were exempted from Central Excise Duty under specific notifications. The dispute arose when the appellant sought Cenvat credit for inputs used in the production of goods that were subsequently exported. The Revenue denied the credit, leading to an appeal by the appellant.2. The Commissioner (Appeals) upheld the Revenue's decision, citing Rule 6(5)(vi) of the Cenvat Credit Rules. This rule was interpreted to imply that if exempted goods are cleared for export, certain provisions of Rule 6 regarding Cenvat credit do not apply. The Commissioner emphasized the statutory requirement of executing a bond for export, which the appellant had not fulfilled. However, a previous order by the Tribunal in a related case had clarified that the Revenue's stance on the inability to export goods under bond was incorrect.3. Based on the Tribunal's earlier ruling, it was established that the appellant could export goods under bond, contrary to the Revenue's assertion. Consequently, the Tribunal concluded that the appellant should be entitled to Cenvat credit on inputs used in the manufacture of goods that were exported, provided all other conditions of the Cenvat Credit Rules were met. As a result, the Tribunal set aside the order of the Commissioner (Appeals) and ruled in favor of the appellant, extending the benefit of Cenvat credit.This judgment clarifies the application of Rule 6(5)(vi) in cases involving the export of exempted goods and underscores the importance of fulfilling statutory requirements for export while determining eligibility for Cenvat credit.