Cash rebate on export duty paid under a concessional notification cannot be denied merely because input credit was not availed.

Cash rebate on exports under Rule 18 was available on duty actually paid under Notification No. 29/2004-C.E.; non-availment of input Cenvat credit did not, by itself, bar rebate or force exclusive resort to Notification No. 30/2004-C.E. The notifications could operate simultaneously if their respective conditions were satisfied and separate accounts were maintained. Excess duty debited over the concessional rate was to be restored by re-credit in the Cenvat account, reflecting that lawfully accumulated credit could be used for duty payment on final products without a one-to-one linkage to specific inputs.

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Issues: Whether rebate in cash under Rule 18 of the Central Excise Rules, 2002 was admissible on exports made on payment of duty under Notification No. 29/2004-C.E. despite the assessees' non-availment of input credit and claimed coverage under Notification No. 30/2004-C.E.; and whether the excess duty debited beyond the concessional rate was refundable by re-credit in the Cenvat account.

Analysis: The dispute turned on the proper relationship between Notification No. 29/2004-C.E. granting concessional duty and Notification No. 30/2004-C.E. granting full exemption subject to non-availment of input credit. The record showed that the assessees were clearing export goods on payment of duty under Notification No. 29/2004-C.E. and had not taken input credit, but the absence of such credit did not by itself compel application of Notification No. 30/2004-C.E. The Board's circulars recognized that the two notifications could be availed simultaneously, subject to separate accounts and compliance with the respective conditions. The authority also noted that there was no one-to-one co-relation between inputs and final products under the Cenvat scheme, and that credit lawfully accumulated could be used for duty payment on any final product. The earlier unchallenged allowance of cash rebate at the concessional rate had attained finality, and the department could not reopen that settled position for identical facts.

Conclusion: The assessees were entitled to cash rebate to the extent of duty paid under Notification No. 29/2004-C.E., and any duty paid in excess of the concessional rate was to be restored by re-credit in the Cenvat account. The orders-in-appeal were set aside and the revision applications were allowed to that extent.

Final Conclusion: The decision preserves the assessees' entitlement to rebate on actual duty paid under the concessional notification while denying the Revenue's attempt to treat non-availment of input credit as a bar to such rebate.

Ratio Decidendi: Where a manufacturer is eligible to operate under a concessional duty notification and the relevant rebate notification permits rebate of duty actually paid, the rebate cannot be denied merely because input Cenvat credit was not taken or because a fuller exemption notification could also have been available, provided the assessee complied with the applicable notification conditions and maintained the required segregation of accounts.

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