Cenvat credit on exported goods under bond cannot be denied solely for a ARE-1 declaration where no drawback or rebate was claimed.

Cenvat credit on inputs used in goods exported under bond cannot be denied merely because the ARE-1 contained a declaration that no credit had been availed, where the exports were under the DEPB scheme and neither drawback nor rebate was claimed. Credit was in fact taken on the inputs, and the incorrect export declaration was not decisive in the absence of any double benefit claim. Rule 5 of the Cenvat Credit Rules, 2002 supported refund of accumulated credit in such export situations. On these facts, the credit was held admissible and the related demand, interest, and penalty were unsustainable.

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Issues: Whether Cenvat credit taken on inputs used in goods exported under bond could be denied merely because the ARE-1 contained a declaration that no credit had been availed, when the exports were under the DEPB scheme and neither drawback nor rebate was claimed.

Analysis: The goods were exported under bond without payment of duty and the inputs had in fact suffered Cenvat credit. The wrong declaration in the export documents was not decisive in the absence of any claim of drawback or rebate. Under the Cenvat Credit Rules, 2002, credit relating to exported goods could not be denied in such circumstances, and Rule 5 also supported refund of accumulated credit where the exports were not under drawback and no rebate had been taken. The reasoning was consistent with the cited tribunal decisions.

Conclusion: The credit could not be denied on the facts of the case, and the demand, interest, and penalty were unsustainable.

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