Deemed exports between export-oriented units qualify for Cenvat credit refund under Rule 5, following settled precedent.

Clearances by one 100% export-oriented unit to another 100% export-oriented unit as deemed exports were treated as exports for refund of unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The Court followed earlier decisions and noted that the position had already been affirmed by the Apex Court in connected matters, so such clearances could not be excluded from the refund scheme. It also accepted that the claim accorded with the incentive structure reflected in the relevant circular and credit-refund provisions, and the issue was answered in favour of the assessee.

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Issues: Whether clearances made by one 100% export-oriented unit to another 100% export-oriented unit as deemed exports are to be treated as physical exports for the purpose of refund of unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004.

Analysis: The Court held that the controversy stood covered by earlier decisions which had accepted that deemed exports are not to be excluded from the expression "exports" for the purpose of refund of accumulated credit. It noted that the final products were cleared to another 100% export-oriented unit and that the legal position had already been affirmed by the Apex Court in connected matters, leaving no room to treat such clearances differently from physical exports for refund entitlement. The Court also accepted that the refund claim was in line with the incentive structure reflected in the relevant circular and the applicable credit-refund provisions.

Conclusion: The issue was answered in favour of the assessee. Clearances made by one 100% export-oriented unit to another 100% export-oriented unit as deemed exports were held to be treatable as physical exports for refund of unutilized Cenvat credit under Rule 5.

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