Exported Goods Service Tax Rebate Appeals Granted, Rejecting Department Challenge

The Tribunal allowed the appeals for rebate of service tax and CESS paid on exported goods, rejecting the Department's challenge on no service export basis. The appellants' refund claim under rule 5 of Cenvat Credit Rules, 2004, for service tax on services used in manufacturing exported goods cleared under bond, was initially denied by the original authority and Commissioner (Appeals). The Tribunal emphasized that rule 6(6) exempts exported goods cleared under bond from credit restrictions on inputs for exempted goods, aligning with previous court decisions. The impugned order was set aside, granting the appeals with consequential relief.

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Issues:
Claim for rebate of service tax and CESS paid on taxable services exported under Export of Services Rules, 2005. Refund claim under rule 5 of Cenvat Credit Rules, 2004. Applicability of rule 6(6) of Cenvat Credit Rules, 2004 on exported goods cleared under bond. Interpretation of rule 6(6) in the context of exempted and dutiable goods exported under bond.

Analysis:
The appellants were manufacturing Psyllium Seed Husk and exporting the products, filing rebate claims for service tax and CESS paid on taxable services exported. A show-cause notice was issued challenging the rebate claim on the grounds of no service export. The appellants then sought to treat the claim as a refund under rule 5 of Cenvat Credit Rules, 2004, for service tax paid on services used in manufacturing exported goods cleared under bond. The original authority and Commissioner (Appeals) rejected the refund claim, citing exemption from duty on exported goods.

The appellant's counsel argued that the findings against refund were contrary to various decisions of the High Court and Tribunal, referencing specific cases. The Departmental Representative supported the Commissioner's findings, noting the exemption of exported goods from duty, thus no bond requirement. The Judicial Member analyzed rule 6(1) and 6(6) of Cenvat Credit Rules, 2004, highlighting that credit is disallowed on inputs for exempted goods, but rule 6(6) exempts exported goods cleared under bond from this restriction.

Referring to the decision in Repro India Ltd. case, the Judicial Member emphasized that rule 6(6) applies to goods wholly exempt from duty, clarifying the term 'excisable goods' to include both dutiable and exempted goods exported under bond. The Tribunal's decision in Drish Shoes Ltd. case supported inputs credit and refund for manufacturing exempted final products exported. The Judicial Member concluded that since the goods were exported without duty liability, in line with previous court and Tribunal decisions, the impugned order was set aside, allowing the appeals with consequential relief.

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