CENVAT refund on deemed exports accepted prima facie, with Revenue failing to show a stay-worthy case.

Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 5/2006 was treated as covering refund of accumulated CENVAT credit relatable to inputs and input services used in clearances treated as deemed exports. The goods were cleared to advance authorisation holders under B-17 bonds and ARE-1s, and the Tribunal view relied on accepted that deemed exports are not excluded from the refund mechanism. Authorities cited by Revenue were distinguished on facts and were held not to govern this setting. On that basis, refund was considered prima facie admissible and Revenue was held not to have established a prima facie case for stay.

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Issues: Whether refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 was available in respect of clearances treated as deemed exports, and whether Revenue had made out a prima facie case for stay of the refund orders.

Analysis: The refund claim was considered in the context of Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 5/2006, which contemplates refund of credit relatable to inputs and input services used in the manufacture of final products cleared for export under bond or letter of undertaking. The removals to advance authorization holders were not disputed, nor was it disputed that the goods were cleared under B-17 bonds and ARE-1s and were treated as deemed exports. The order accepted the view, supported by several Tribunal decisions, that deemed exports are not excluded from the ambit of refund under Rule 5. The decisions relied upon by Revenue were distinguished because they did not govern the present factual setting.

Conclusion: Refund under Rule 5 was treated as prima facie admissible on deemed export clearances, and Revenue failed to establish a prima facie case for stay.

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