Cenvat Credit on Imported Capital Goods: Export under bond permitted without reversal where duty was already paid on import.

Export of goods may be made under rebate or under bond, and there is no bar on clearing imported used capital goods for export under bond. The Tribunal treated the relevant instruction manual provision as pari materia with the erstwhile Rule 57AB and applied the Board circular on the basis that duty had already been recovered at import stage. On that reasoning, the view that only goods manufactured in India could be exported under bond was rejected, and reversal of Cenvat credit was held not required for such clearance.

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Issues: Whether Cenvat credit was required to be reversed when imported and used capital goods were cleared for export under UT-1 undertaking or bond.

Analysis: The Tribunal noted that export of goods may be made either under claim for rebate or under bond, and that there is no bar on removal of inputs or capital goods as such for export under bond. It further held that the instruction manual provision permitting such export was pari materia to the erstwhile Rule 57AB, and that the Board circular applied to the facts because the duty element had already been recovered at the stage of importation. On that basis, the Tribunal agreed that the department's view that only goods manufactured in India could be exported under bond was untenable.

Conclusion: Reversal of Cenvat credit was not required, and the clearance of imported used capital goods for export under bond was permissible.

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