Cenvat credit refund allowed for exported goods where rebate covered only final-product duty, not input duty.

Refund of unutilised Cenvat credit was admissible where additional excise duty had been paid on inputs used in goods exported on payment of duty, and rebate under Rule 18 had been claimed only for the duty on the final products. Rule 5 of the Cenvat Credit Rules, 2002 was held to permit refund in that situation because the proviso was not triggered when no rebate was taken for the same duty component. The objection that the exports were under bond was also unavailable, as that ground was not raised in the show cause notice and the exports were in any event made on payment of duty.

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Issues: Whether refund of unutilised Cenvat credit on inputs used in the manufacture of goods exported on payment of duty, where rebate of the duty on the final products was claimed under Rule 18, was admissible under Rule 5 of the Cenvat Credit Rules, 2002.

Analysis: The refund claim arose from additional excise duty paid on inputs used in the exported goods. The final products were exported on payment of basic excise duty and the rebate granted under Rule 18 related only to the duty paid on the excisable final goods. No rebate was sought or obtained in respect of the additional excise duty paid on the inputs. The Court accepted the view that Rule 5 permitted refund of the unutilised credit in such circumstances, and that the proviso to Rule 5 was not attracted because the assessee had not claimed rebate of the same duty component. The objection based on export under bond was also unavailable, as that ground had not been raised in the show cause notice and the exports were in any event made on payment of duty.

Conclusion: The refund under Rule 5 was admissible and the assessee succeeded on the issue.

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