Rebate on exported capital goods removed as such is limited to Cenvat credit reversal, not full duty paid on transaction value.

Where capital goods are exported after being removed as such and no manufacture has taken place, the Cenvat credit taken on receipt must be reversed under the Cenvat Credit Rules. In that situation, rebate under the export rebate provisions cannot extend to the full duty paid on the transaction value, because the goods were not excisable goods exported after manufacture. The rebate is confined to the amount of Cenvat credit availed on the capital goods, and the restricted-rebate position is sustained.

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Issues: Whether rebate on exported capital goods removed as such was admissible on the full duty paid, or whether it was restricted to the amount of Cenvat credit availed and required to be reversed under the Cenvat Credit Rules.

Analysis: The goods were procured as capital goods, Cenvat credit had been taken on their receipt, and the goods were exported after tests/processes that did not amount to manufacture. In such a case, the goods were removed as such under Rule 3(4) of the Cenvat Credit Rules, 2002, which required reversal of the credit taken. Since there was no manufacture of the goods, the claim for rebate on the transaction value could not be sustained under the rebate provisions governing excisable goods exported after payment of duty. The rebate was therefore confined to the amount of credit availed on the capital goods.

Conclusion: The rebate claim was not admissible on the full duty paid and stood restricted to the Cenvat credit availed. The revision application failed.

Final Conclusion: The order-in-appeal was upheld and the revision was rejected, leaving the Revenue's restricted-rebate position intact.

Ratio Decidendi: Where capital goods are removed as such without manufacture, rebate on export is limited to the Cenvat credit required to be reversed and cannot extend to full duty paid on the transaction value.

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