CENVAT refund on duty-paid inputs for exports cannot be denied merely because the exporter is a declarant unit.

Refund under Rule 5 of the CENVAT Credit Rules was considered admissible for duty-paid inputs used in exported goods where the export nexus and duty payment were established. The fact that the unit was a declarant unit claiming SSI exemption, and had not availed CENVAT credit, was treated as insufficient by itself to defeat the refund claim. The Tribunal relied on the principle that taxes should not be exported and on the scheme of Rules 5, 18 and 19 to support refund where duty-paid inputs were duly correlated with exported goods. Revenue's cited precedent was found factually inapposite.

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Issues: Whether refund under Rule 5 of the CENVAT Credit Rules, 2004 was admissible for duty-paid inputs used in the manufacture of exported goods when the unit was a declarant unit claiming SSI exemption and had not availed CENVAT credit.

Analysis: The inputs were admittedly procured on payment of Central Excise duty and were consumed in the manufacture of final products that were exported. The objection that the respondent was a declarant unit and therefore not entitled to CENVAT credit was found insufficient to defeat the refund claim, since the material point was that duty had been paid on inputs used for export. The export policy principle that taxes should not be exported, together with the scheme reflected in Rules 5, 18 and 19, supported grant of refund where the duty-paid inputs were duly correlated with the export goods. The Tribunal also found the cited precedent relied on by Revenue to be factually inapposite.

Conclusion: The refund claim was held to be admissible and the Revenue's appeal failed.

Final Conclusion: The order of the lower authorities allowing refund was affirmed and the Revenue's challenge was rejected.

Ratio Decidendi: Where duty-paid inputs are used in the manufacture of goods exported out of India, refund cannot be denied merely because the exporter is a declarant unit or has not availed CENVAT credit, if the export nexus and duty payment are established.

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