Export rebate and unutilised input credit relief allowed where inputs were exported as such without defeating export incentive policy.

Where inputs are exported as such after availment of credit, and the credit has not been utilised elsewhere, rebate of duty paid on export and consequential refund of the unutilised input credit are allowable because the export incentive scheme is intended to prevent domestic taxes from being exported. The CESTAT, Chennai held that denying such relief would defeat the policy underlying export benefits, and the adverse orders were set aside with directions to extend the claimed benefit.

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Issues: Whether the assessee was entitled to rebate or refund of duty paid on single yarn exported as such, along with refund of the input credit taken in respect of the yarn, where such credit had not been utilised elsewhere.

Analysis: The dispute concerned export of inputs as such after availment of credit on the inputs. The decision noted that the scheme permits removal of inputs as such for export without payment of duty and that export policy is intended to encourage exports while preventing domestic taxes from being exported. On that footing, the duty paid on export and the associated input credit, to the extent not already utilised elsewhere, were held to be eligible for relief. The denial by the lower authorities was found contrary to the legal position and the policy objective underlying export benefits.

Conclusion: The assessee's claim for rebate and consequential refund was accepted, and the adverse orders were set aside with the matter sent back for grant of the claimed benefit.

Ratio Decidendi: Where inputs are exported as such and the input credit has not been utilised elsewhere, denial of rebate or refund defeats the export incentive scheme because domestic taxes are not intended to be exported.

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