Customs-only drawback does not bar refund of accumulated Cenvat credit under Rule 5 where no excise element is claimed.

Refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2002 is not barred where exports are made through a merchant exporter and the drawback claimed relates only to the customs portion. The decisive factor is whether the drawback includes any Central Excise duty element: if it does not, the proviso denying refund where drawback or rebate of duty is availed does not apply. The drawback schedule for the relevant goods showed the allocation as customs duty only, and the Board's circular confirmed that refund of unutilized excise credit remains available in such cases. The assessee was therefore entitled to cash refund of the accumulated credit.

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Issues: Whether the manufacturer was entitled to refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2002 when the goods were exported through a merchant exporter under drawback claim, and the drawback shown in the schedule was only of customs duty.

Analysis: Rule 5 permits refund of accumulated credit where inputs are used in goods cleared for export, but the proviso denies refund if the manufacturer avails drawback of customs and Central Excise duty or claims rebate of duty. The decisive question was whether the drawback claimed in the present exports included any excise duty element. The drawback rate schedule for the relevant period showed that the All Industry Rate for aluminium pistons and piston assemblies under heading 84.63 was Rs. 4 per kg., and the allocation columns indicated that the entire drawback was attributable only to customs duty. The Board's Circular No. 83/2000-CUS. dated 16-10-2000 also clarified that where only the customs portion is claimed as drawback, refund of unutilized excise credit is not barred.

Conclusion: The drawback claim did not include Central Excise duty, so the proviso to Rule 5 did not bar refund. The assessee was entitled to cash refund of the accumulated Cenvat credit.

Ratio Decidendi: Where export drawback relates only to the customs portion and contains no excise duty component, the proviso to Rule 5 of the Cenvat Credit Rules, 2002 does not preclude refund of unutilized Cenvat credit.

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