EOU manufacture under Exim Policy supports refund of accumulated credit for export-oriented clearances.

For a 100% EOU, converting stone blocks into slabs or tiles was treated as manufacture under the wider Exim Policy definition, not confined to Section 2(f) of the Central Excise Act. That broader EOU-specific meaning governed entitlement to benefits and exemption, and supported refund under Rule 5 of the Cenvat Credit Rules where accumulated input service credit could not be utilised. A Board circular was read consistently with this approach. The denial of refund was therefore unsustainable, and the refund claims were held admissible.

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Issues: Whether the process undertaken by a 100% EOU converting stone blocks into slabs or tiles amounted to manufacture for the purpose of refund of accumulated input service credit under Rule 5 of the Cenvat Credit Rules, 2004.

Analysis: The appeal turned on whether the definition of manufacture under the Exim Policy, which was wider than Section 2(f) of the Central Excise Act, 1944, governed the activity of the EOU. The Tribunal relied on earlier decisions holding that where the Exim Policy treats the process as manufacture, that wider definition is relevant for EOU benefits and exemption. It also noted that refund under Rule 5 is available where accumulated credit cannot be utilised because the final product is cleared under an exempt or export-oriented regime. The Board circular referred to in the order supported a broader interpretation of the exemption for EOUs and indicated that the benefit should not be confined only to manufacture under Section 2(f).

Conclusion: The process was to be treated as manufacture for the purpose of the EOU regime, and the denial of refund was unsustainable. The refund claims were held to be admissible.

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