CENVAT credit on duty-paid goods exported under bond survives re-packing and relabelling without proof of manufacture.

CENVAT credit remained available on duty-paid bought out goods exported under bond after re-packing and relabelling, because Rule 16 of the Central Excise Rules permits removal of duty-paid goods for export and the CBEC circular recognized credit even where inputs are exported as such. The absence of proof of a separate manufacturing process did not defeat entitlement where the goods were purchased in bulk and exported in smaller packed form. The denial of credit was therefore unsustainable.

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Issues: Whether CENVAT credit was admissible on duty-paid bought out goods exported under bond after re-packing and relabelling, and whether proof of a manufacturing process was necessary for such credit.

Analysis: The appeal turned on the interaction of Rule 16 of the Central Excise Rules and the CBEC circular relied upon by the appellant. The export of the goods was not in dispute. The denial of credit was based on the view that the appellant had not proved that the bought out items had undergone manufacturing and that the circular applied only to inputs cleared as such. The Tribunal held that Rule 16 permits removal of duty-paid goods for export for any reason, and the circular clarified that credit remains available even where inputs are exported as such under bond. On the record, the goods had been purchased in bulk and exported in smaller packed form, and the absence of proof of a separate manufacturing process did not defeat entitlement to credit.

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

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