CENVAT credit on exported exempt goods cannot be denied merely because the final product is exempt and no bond was filed.

CENVAT credit on inputs used to manufacture goods cleared entirely for export could not be denied merely because the final product was exempted or nil-rated and no bond was furnished. Prior decisions were applied to hold that the export-linked exception under the CENVAT Credit Rules protected such credit where the goods were actually exported. As the record showed that the whole production was exported and that fact was not in dispute, the denial of credit was unsustainable and the assessee was entitled to the input credit.

---

---

Issues: Whether CENVAT credit could be denied on inputs used in the manufacture of goods cleared entirely for export on the ground that the final product was exempted and no bond was furnished.

Analysis: The dispute was covered by prior decisions holding that where an assessee manufactures goods chargeable to nil duty or otherwise exempted and the goods are exported, the exception contained in the CENVAT Credit Rules applies and credit on inputs used for such exported goods cannot be denied merely because the final product is exempted. The record showed that the entire production was exported, and there was no factual dispute on that aspect.

Conclusion: CENVAT credit was admissible to the assessee and the denial of credit was unsustainable.

---