Deemed exports to 100% EOUs can qualify for refund of unutilized Cenvat credit under Rule 5.

Clearances by a DTA unit to a 100% EOU under the CT-3/ARE-3 procedure were treated as deemed exports, and the governing principle applied was that such deemed exports are to be equated with physical exports for refund entitlement under Rule 5 of the Cenvat Credit Rules, 2004. The earlier binding precedent of the same High Court, reinforced by the Supreme Court's treatment of similar supply arrangements, was followed, and a contrary view from another High Court did not displace that binding authority. On that basis, the manufacturer was held entitled to refund of unutilized Cenvat credit.

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Issues: Whether clearances made by a DTA unit to a 100% Export Oriented Unit under the CT-3/ARE-3 procedure, treated as deemed exports, entitle the manufacturer to refund of unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004.

Analysis: The issue was held to be covered by earlier binding precedent of the same High Court and by the Supreme Court's treatment of similar disputes involving deemed exports and supplies to 100% EOUs. The governing principle applied was that, in the context of such clearances, deemed exports were to be treated at par with physical exports for the purpose of refund entitlement under Rule 5. The existence of a contrary view from another High Court did not displace the binding effect of the earlier decision of this Court.

Conclusion: The clearances to the 100% EOU were entitled to be treated as physical exports for refund of unutilized Cenvat credit, and the Revenue's appeal failed.

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