Cenvat credit on export inputs remains available, and unutilised credit from exports is refundable under Rule 5.

Export clearances by a 100% export-oriented undertaking are not treated as exempt goods for denying Cenvat credit. Duty paid indigenous inputs may therefore be credited, because Rule 6(1) does not apply where Rule 6(6) carves out exports, and Rule 5 allows refund of unutilised credit attributable to exported final products. The earlier objection based on Rule 6(1) was rejected because the distinction between exempt goods and export goods was determinative, and the unutilised credit arising from exports was held refundable with consequential relief.

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Issues: Whether a 100% export-oriented undertaking exporting goods could avail Cenvat credit on duty paid indigenous inputs and claim refund of unutilised credit under Rule 5 of the CENVAT Credit Rules, 2004, notwithstanding the objection based on Rule 6(1) of the CENVAT Credit Rules, 2004.

Analysis: Rule 6(1) denies credit where inputs are used in exempted goods, but Rule 6(6) carves out exceptions, including goods cleared for export under bond. The export of the finished products meant that they did not suffer domestic excise duty, and a 100% export-oriented undertaking is not barred from procuring duty paid indigenous inputs or from taking credit on such inputs. The decision also recognized that Rule 5 provides refund of credit that cannot be utilized because the final products are exported. The earlier authorities were found to have overlooked the effect of Rule 6(6) and the settled distinction between exempt goods and export goods.

Conclusion: The assessee was entitled to take Cenvat credit on duty paid inputs and to obtain refund of the unutilised credit under Rule 5. The objection based on Rule 6(1) failed.

Final Conclusion: The appeals succeeded and the refund claims were held admissible with consequential relief.

Ratio Decidendi: Export goods, including those cleared by a 100% export-oriented undertaking, are not to be equated with exempt goods for the purpose of denying Cenvat credit, and unutilised credit attributable to exports is refundable where the governing rules expressly carve out export clearances.

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