Cenvat credit on packing materials used for export goods need not be reversed when cleared under bond through an export godown.

Eligible packing materials cleared under CT-2 to an assessee's Export Processing Godown for packing export goods under bond were held not to attract reversal of Cenvat credit. Because the clearances were made in compliance with Central Excise procedure and Notification No. 43/2007, Rule 6 of the Cenvat Credit Rules did not apply; the materials were not removed as such for domestic use. The demand for reversal was therefore unsustainable, and the assessee was entitled to retain the credit.

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Issues: Whether cenvat credit taken on packing materials was required to be reversed when the materials were cleared under CT-2 certificate to the assessee's Export Processing Godown for use in export goods.

Analysis: The packing materials were admittedly eligible inputs, and they were cleared to the assessee's own Export Processing Godown for packing goods meant for export under bond. The clearances were effected in accordance with the Central Excise procedure and Notification No. 43/2007. In these circumstances, the bar under Rule 6 of the Cenvat Credit Rules did not apply, and the materials were not being removed as such for domestic consumption. The credit, therefore, was not liable to be reversed merely because the materials moved to the export godown under CT-2 procedure.

Conclusion: The assessee was entitled to retain the cenvat credit and the demand for reversal was not sustainable.

Final Conclusion: The appeal failed and the impugned order allowing the assessee's claim was sustained.

Ratio Decidendi: Where eligible packing materials are cleared under bond for use in export goods through a bonded export godown in compliance with the prescribed excise procedure, cenvat credit is not required to be reversed.

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