CENVAT credit on exempted goods exported under bond is available where the export exception under the rules applies.

CENVAT credit on inputs used in exempted final products remains available where the exempted goods are exported under bond. Rule 6(1) of the Cenvat Credit Rules, 2002 generally bars credit for inputs used in exempted goods, but Rule 6(5)(vi) creates an express exception for exempted goods cleared for export under bond under the Central Excise Rules, 2002. As Rule 19 permits export under bond and does not prohibit export of exempted goods, the restriction in Rule 6(1) to (4) did not apply. The assessee was therefore entitled to the credit, and the Revenue's appeal failed.

---

---

Issues: Whether CENVAT credit on inputs used in the manufacture of exempted final products is available when such exempted goods are exported under bond.

Analysis: Rule 6(1) of the Cenvat Credit Rules, 2002 generally denies credit on inputs used in exempted goods, but sub-rule (5)(vi) expressly carves out an exception where exempted goods are cleared for export under bond in terms of the Central Excise Rules, 2002. Rule 19 of the Central Excise Rules, 2002 permits export under bond and does not prohibit export of exempted goods. Since the goods were exported under bond, the prohibition in Rule 6(1) to (4) did not apply.

Conclusion: The assessee was entitled to take CENVAT credit on the inputs contained in the exempted goods exported under bond, and the Revenue's appeal failed.

---