Input duty credit remains admissible for exports under bond even where processing does not amount to manufacture.

Credit of duty paid on inputs remains admissible where processed goods are exported under bond, even if the processing on the inputs does not amount to manufacture. The Tribunal applied Rule 57F(2) of the Central Excise Rules and the relevant Board circular, and followed earlier co-ordinate and prior decisions that had not been shown to be overturned by any higher forum. On that basis, it rejected the Revenue's contrary view, set aside the impugned order, and allowed the appeal with consequential relief.

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Issues: Whether credit of duty paid on inputs is admissible when the processed goods are exported under bond, even if the processes undertaken do not amount to manufacture.

Analysis: The Tribunal followed the earlier view that credit does not become inadmissible merely because the activity undertaken on the inputs is not manufacture, where the processed inputs are exported under bond. It relied on the applicability of Rule 57F(2) of the Central Excise Rules and the Board circular, and noted that the earlier decision had not been shown to have been set aside by a higher forum. A co-ordinate decision taking the same view was also noticed.

Conclusion: The assessee was entitled to credit of the duty paid on the inputs, and the Revenue's contrary view was rejected.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Credit of duty paid on inputs remains admissible for goods exported under bond even if the processing carried out on those inputs does not amount to manufacture, where the governing rule and circular so permit.

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