Rebate on exported inputs and capital goods upheld where credit reversal was treated as duty payment and export identity was certified.

Rebate of duty was held admissible on export of inputs or capital goods cleared after reversal of Cenvat credit. Rule 3(4) of the Cenvat Credit Rules, 2002 requires payment of an amount equal to the duty leviable on such goods, and Rule 3(5) treats that amount as duty paid; the earlier Modvat principle under Rule 57F(1)(ii) was applied on the basis that the 2002 Rules are pari materia. The objection that credit reversal is not duty payment was rejected, and the exported goods' identity was treated as established through ARE 1 forms certified by Customs authorities.

---

---

Issues: Whether rebate of duty was admissible on export of inputs or capital goods cleared by reversing Cenvat credit under the relevant Cenvat and Central Excise Rules, and whether the identity of the exported goods stood established.

Analysis: Under Rule 3(4) of the Cenvat Credit Rules, 2002, when inputs or capital goods on which credit has been taken are removed as such, the manufacturer is required to pay an amount equal to the duty leviable on such goods, and Rule 3(5) treats the amount so paid as duty paid. The earlier Modvat provision in Rule 57F(1)(ii) of the Central Excise Rules, 1944 was held by the Central Government to support rebate where duty paid inputs or capital goods were exported after payment of the prescribed amount, the exporter being treated as a deemed manufacturer. The same principle applies where the 2002 Rules are pari materia with the earlier rule. The contention that payment by credit reversal is not payment of duty was rejected, since the amount paid on clearance retains the character of duty for rebate purposes. The identity objection was also rejected because the exports were made under ARE 1 forms certified by the Customs authorities, which serve to establish the link between the duty paid goods and the exported goods.

Conclusion: Rebate of duty was admissible, and the assessee's entitlement to rebate was upheld.

---