Exported goods under bond/LUT qualify for Cenvat credit despite domestic exemption, as Rule 6(6)(v) carves out a special exception.

Cenvat credit remained admissible on inputs used in tractors exported under bond/LUT, even though the tractors were otherwise exempt for domestic clearances. The controlling principle was that Cenvat credit neutralises duty on inputs and exports should not bear domestic taxes. Rule 6(6)(v) operated as a specific exception for exported goods, so the restriction in Rule 6(1) did not apply to exports under bond/LUT. Denial of credit in such cases would defeat the export-relief scheme and undermine the objective of keeping exported goods internationally competitive.

---

---

Issues: Whether Cenvat credit was admissible on inputs used in the manufacture of exempted tractors cleared for export under bond/LUT, and whether the bar under Rule 6(1) of the Cenvat Credit Rules, 2004 applied notwithstanding Rule 6(6)(v).

Analysis: The controlling principle applied was that Cenvat credit is intended to neutralize duty suffered on inputs and that exports should not bear domestic taxes. The Tribunal followed the Bombay High Court's reasoning that Rule 6(6)(v) was consciously enacted as a special exception for exported goods, so the bar under Rule 6(1) does not apply to goods exported under bond/LUT. On that basis, denial of credit merely because the final product was otherwise exempted for domestic clearances would frustrate the export-relief scheme and defeat the object of making exported goods internationally competitive.

Conclusion: Cenvat credit was held admissible on the inputs used in the exported tractors, and the assessee's position was accepted.

Final Conclusion: The Revenue's challenge failed and the order allowing export-related credit relief was sustained.

Ratio Decidendi: Rule 6(1) of the Cenvat Credit Rules, 2004 does not bar Cenvat credit on inputs used in goods exported under bond/LUT where Rule 6(6)(v) specifically exempts exported goods from that restriction.

---