Cenvat credit on goods exported as such under bond was admissible and denial of credit was unsustainable.

Cenvat credit was held admissible on inputs and packing material exported as such under bond or LUT without reversal of credit. Relying on CBEC manual guidance and Board clarification, the Tribunal accepted that there is no bar on removal of inputs or capital goods as such for export under bond and that such clearances may be made without payment of duty. It also applied the principle that a beneficial Board circular must be given effect to. The denial of credit was therefore unsustainable.

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Issues: Whether Cenvat credit was admissible on inputs and packing material exported as such under bond without reversal of credit.

Analysis: The appeal concerned denial of Cenvat credit on goods procured and subsequently exported as such under LUT or bond. The Tribunal relied on the CBEC Manual and the Board clarification stating that there is no bar to removal of inputs or capital goods as such for export under bond, and that such export clearances can be made without payment of duty. The Tribunal also followed the earlier view that a beneficial circular issued by the Board must be given effect to, and that the manufacturer is entitled to export such goods under bond.

Conclusion: Cenvat credit was admissible and the denial of credit was unsustainable.

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