Uniform export turnover valuation governs Rule 5 refund computation; capital goods consumed in use remain ineligible as inputs.

Refund under Rule 5 of the CENVAT Credit Rules, 2004 must be recomputed by using a uniform export turnover value in both the numerator and denominator of the formula; inconsistent valuation was treated as incorrect, so the matter was remanded for fresh computation. Credit refund on segments and castings was not admissible as inputs because they were classified as capital goods under Chapter sub-heading 84399100, and their consumption or exhaustion in use did not alter that character. The refund claim on those items was therefore denied, while relief was limited to recomputation on the correct formula.

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Issues: (i) Whether refund under Rule 5 of the CENVAT Credit Rules, 2004 was required to be recomputed by adopting the same value for export turnover in the numerator and denominator of the formula; (ii) Whether CENVAT credit refund on segments and castings was admissible as inputs or was correctly denied as relating to capital goods.

Issue (i): Whether refund under Rule 5 of the CENVAT Credit Rules, 2004 was required to be recomputed by adopting the same value for export turnover in the numerator and denominator of the formula.

Analysis: The refund claim had been reduced because different values were used for export turnover in the numerator and denominator of the prescribed formula. The earlier order of the Tribunal had already treated such inconsistent valuation as incorrect and had directed reconsideration by applying a uniform value. The record also showed that, in subsequent proceedings, refund was sanctioned by adopting FOB value uniformly in both parts of the formula. The same approach was warranted in the present matter.

Conclusion: The matter was remanded for recomputation of refund by applying a uniform value in both the numerator and denominator under Rule 5.

Issue (ii): Whether CENVAT credit refund on segments and castings was admissible as inputs or was correctly denied as relating to capital goods.

Analysis: The segments and castings were classified under Chapter sub-heading 84399100 of the Central Excise Tariff Act, 1985 as capital goods. Their limited working life and exhaustion during use in grinding did not change their character into inputs used in manufacture. On that basis, the claim for cash refund on such items was not sustainable under the refund provision.

Conclusion: The denial of refund on segments and castings was upheld.

Final Conclusion: The refund dispute succeeded only to the extent of recomputation on the correct formula, while the claim relating to segments and castings failed.

Ratio Decidendi: Under Rule 5 of the CENVAT Credit Rules, 2004, the export turnover value used in the refund formula must be applied uniformly in both the numerator and denominator, but goods classified as capital goods do not become inputs merely because they are consumed or exhausted in use.

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