CENVAT credit on duty-paid inputs was retained for bond exports, as A.R.E.-2 certification did not bar the claim.

CENVAT credit on duty-paid inputs remained admissible when finished goods were exported under bond under Rule 19 read with Notification No. 43/2001-C.E. (N.T.), because the export procedure did not prohibit such credit merely since some inputs were also procured without duty. The A.R.E.-2 form was only a common export document for rebate and bond exports, and its certification did not create a substantive bar to credit. The restriction on input credit applied where rebate or drawback was claimed, or where exports were made under the DEEC scheme; as none of those situations existed, reversal of credit was not required and denial of credit was unsustainable.

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Issues: Whether CENVAT credit on duty-paid inputs was admissible when finished goods were exported without payment of duty under Rule 19 of the Central Excise Rules, 2002 read with Notification No. 43/2001-C.E. (N.T.), and whether the certification in the A.R.E.-2 form barred such credit.

Analysis: The relevant export procedure under Rule 19 and the notification did not prohibit the use of duty-paid inputs merely because the exporter also procured some inputs without payment of duty for export under bond. The A.R.E.-2 form was a common application for exports under rebate as well as under bond, and the certification therein could not be read as a substantive bar against availing CENVAT credit. The restriction on availing input credit applied where input-stage duty was claimed back by way of rebate or drawback, or where exports were made in discharge of export obligation under the DEEC scheme. Since no such claim was made and the exports were under bond, reversal of the credit was not required.

Conclusion: The denial of CENVAT credit was unsustainable, and the assessee was entitled to retain the credit.

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