Cenvat credit refund for goods used in bonded exports upheld where intermediate clearance did not break the export chain.

Refund of accumulated Cenvat/Modvat credit was treated as admissible where high-tension steel wires were moved to another factory under Chapter X procedure and the intermediate product made therefrom was ultimately exported under bond. The Tribunal regarded the recipient factory as part of the export chain, so the absence of direct export from the original manufacturing premises did not defeat credit refund. It applied the prior view that goods exported under bond are neither exempted goods nor goods chargeable at nil duty, and treated the later Cenvat provisions as pari materia with the earlier Modvat rules. On that basis, unutilised credit remained refundable when it could not be set off against duty.

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Issues: Whether refund of accumulated Cenvat/Modvat credit was admissible where high-tension steel wires were cleared to another factory under Chapter X procedure and the intermediate product manufactured therefrom was ultimately exported under bond.

Analysis: The export of the final product was not in dispute. The fact that the intermediate goods were not cleared directly from the manufacturing premises for export did not defeat the claim, because the Tribunal treated the recipient factory as part of the export chain for the purpose of credit availment. The reasoning applied the earlier Tribunal view that goods exported under bond are not to be equated with exempted goods or goods chargeable to nil rate of duty, and that the later Cenvat rules are pari materia with the earlier Modvat provisions. On that basis, the accumulated credit remained refundable when it could not be utilised against duty on final products cleared for home consumption or export.

Conclusion: Refund of the accumulated credit was held admissible, and the Revenue's appeal was rejected.

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