Cenvat credit on input services cannot be denied merely because exempted goods were exported, the Tribunal held.

Cenvat credit on input services could not be denied merely because the assessee had availed Notification No. 30/2004-C.E. for goods that were exported. The Tribunal reasoned that export of goods does not attract duty, and the assessee could not be put in a worse position only because an exemption notification was claimed in relation to the final product. Where the input service was used in connection with the exported goods, credit remained available. The denial of credit was therefore unsustainable, the impugned order was set aside, and the appeal was allowed with consequential relief.

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Issues: Whether Cenvat credit on input services could be denied merely because the assessee had availed the benefit of Notification No. 30/2004-C.E. while the final goods were exported.

Analysis: The assessee was engaged in manufacture and export of goods. The denial of credit rested on the premise that, since Notification No. 30/2004-C.E. was claimed in relation to the exempted final product, input or input-service credit was unavailable. The Tribunal held that export of goods does not attract duty and that the assessee could not be placed in an adverse position merely because of the exemption notification. Where the input service was ultimately used in relation to exported goods, the credit could not be denied on that ground alone.

Conclusion: The assessee was entitled to the Cenvat credit on the input service, and the denial of credit was unsustainable.

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

Ratio Decidendi: Cenvat credit cannot be denied solely because the assessee avails an exemption notification when the goods are exported and the input service is used for the exported goods.

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