Cenvat credit on exported exempted goods cannot be denied merely because the export was not under bond.

Cenvat credit on inputs used in exempted goods exported by the assessee could not be denied merely because the export was not made under bond. The Tribunal applied Rule 6(5)(vi) of the Cenvat Credit Rules and held that the embargo in Rule 6(1) to 6(4) did not operate against exempted goods cleared for export. Once the Revenue's premise that export in bond was unavailable had already been rejected in the assessee's earlier matter, denial of credit on that ground alone was unsustainable. Credit remained available subject to satisfaction of the remaining statutory conditions.

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Issues: Whether Cenvat credit on inputs used in the manufacture of exempted goods exported by the assessee could be denied on the ground that the export was not made under bond.

Analysis: The appeal turned on the applicability of Rule 6(5)(vi) of the Cenvat Credit Rules, under which the assessee contended that the embargo in Rule 6(1) to 6(4) did not apply to exempted goods cleared for export. The Tribunal noted that the Revenue's premise that export in bond was unavailable was already rejected in the assessee's own earlier matter. Once that premise failed, denial of credit solely because the goods were not exported under bond could not be sustained. The entitlement to credit remained subject to fulfilment of the other conditions prescribed by the Cenvat Credit Rules.

Conclusion: The denial of Cenvat credit was unsustainable and the assessee was entitled to the benefit of credit, subject to the remaining statutory conditions.

Final Conclusion: The impugned appellate order was set aside and the assessee's claim to Cenvat credit was upheld.

Ratio Decidendi: Where exempted goods are exported, Cenvat credit on inputs cannot be denied merely because the export was not made under bond, if the other requirements of the Cenvat Credit Rules are satisfied.

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