Cenvat credit on exports under bond remains available absent express statutory reversal, even without rebate under Rule 18.

A Single Member Bench was treated as competent to hear a Cenvat credit dispute because the jurisdictional objection was not raised at the earliest stage and the matter was not regarded as one of classification or duty rate. On the substantive issue, Cenvat credit on disputed inputs cleared for export under bond was held admissible, because the export scheme does not contemplate export of taxes and the absence of an express statutory requirement for reversal could not justify denial of credit merely because no rebate under Rule 18 was claimed. The commentary notes that credit was retained and consequential relief followed.

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Issues: (i) whether the appeal could be heard by a Single Member Bench in a matter touching the character of the process as manufacture for Cenvat credit purposes; (ii) whether Cenvat credit was rightly denied on the four disputed items exported as such, and whether reversal was warranted in the absence of rebate under Rule 18.

Issue (i): whether the appeal could be heard by a Single Member Bench in a matter touching the character of the process as manufacture for Cenvat credit purposes.

Analysis: The objection on maintainability was rejected because the jurisdictional objection had not been raised at the earliest stage and the matter was already in a second round of litigation. The dispute was also not treated as one involving classification or rate of duty so as to take it outside the competence of a Single Member Bench.

Conclusion: The Single Member Bench was competent to hear and decide the appeal.

Issue (ii): whether Cenvat credit was rightly denied on the four disputed items exported as such, and whether reversal was warranted in the absence of rebate under Rule 18.

Analysis: The denial of credit was found unsustainable because the goods had been cleared under bond for export, the scheme of the law does not contemplate export of taxes, and the absence of an express provision for reversal in such a situation could not justify denial of credit. The reasoning also noted that the disputed items were not covered by the basis on which the Commissioner (Appeals) had relied to deny the benefit, and that the exporter was entitled to retain the credit on the exported inputs.

Conclusion: Cenvat credit on the four disputed items was admissible and the denial of credit was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee was held entitled to the full Cenvat credit with consequential relief.

Ratio Decidendi: Where goods are exported under bond, Cenvat credit on inputs cannot be denied merely because no rebate was claimed, unless the statute expressly requires reversal or withdrawal of such credit.

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