TaxTMI 
TaxTMI 
2019 (6) TMI 362
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....ortionate credit availed on common input services used in the manufacture of both dutiable as well as exempted final products. 2.1 The Department was of the view that the amount so reversed is incorrect. According to the Department, the clearances of the appellant can be made out into the following categories: (i) Clearance for home consumption claiming exemption under Notification No. 30/2004; (ii) Clearance for export (DEPB clearance) claiming exemption under Notification No. 30/2004; (iii) Clearance for export under duty drawback scheme claiming exemption under Notification No. 30/2004; (iv) Clearance without payment of duty under Notification No. 30/2004 for manufacture of fabrics on job work basis; (v) Clearance on payment of duty under claim for rebate under Notification No. 29/2004; (vi) Clearance of yarn waste without payment of duty. 2.2 According to Rule 6 of the CENVAT Credit Rules, 2004, to compute the value of exempted clearances, the appellant has to take into account the value of clearances mentioned against Serial Nos. (i), (ii), (iii), (iv) and (vi) so as to arrive at the value of exempted goods cleared. H....
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....ut payment of duty. 3.3.1 With regard to the clearances for export claiming exemption under Notification No. 30/2004, Ld. Advocate submitted that the appellant has not availed any credit on inputs. The credit was availed only on input services. As per Notification No. 30/2004, the bar is only on availment of credit on 'inputs' and not on 'input services'. He referred to Rule 6 of the CENVAT Credit Rules, 2004 and submitted that as per Rule 6 (6) (v) of the CENVAT Credit Rules, when the goods are exported under bond, the obligation of the manufacturer not to take credit on common inputs used for manufacture of dutiable and exempted products is not applicable. In the present case, the appellants have exported the entire goods and this is not disputed by the Department. The case of the Department is that as per the amendment in Notification No. 42/2001-C.E. (N.T.) by virtue of Notification No. 24/2010-C.E. (N.T.) dated 26.05.2010, a bond is not required for export of exempted goods. It is submitted that execution of a bond is only a procedural requirement and even if no bond is executed, the said provision would apply. In the case of exempted goods, there is no liability to pay dut....
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....n 2015 (39) S.T.R. 514 (Tri. - Mum.) also considers the eligibility of credit of service tax paid on input services while claiming the benefit of Notification No. 30/2004. 3.4.1 With regard to the second issue relating to the requirement of adding the turnover of yarn waste to arrive at the amount that has to be reversed by the appellant, Ld. Advocate submitted that Rule 57D of the erstwhile MODVAT scheme stated that the inputs contained in waste is eligible for credit and therefore, not required to be reversed. The Board has issued Supplementary Instructions after the introduction of the CENVAT Credit Rules, clarifying this aspect. He referred to paragraph 3.7 of the said Instructions to argue that CENVAT Credit is admissible in respect of inputs contained in any waste, refuse or by-product. The period involved is from 2009 to 2011 (September 2011) and that the said Instructions are binding on the Department. He argued that the reversal of proportionate credit made by the appellant is in order and that the demands made in the Show Cause Notice as regards the issue contested in this appeal are illegal. 3.4.2 He relied upon the decision in the case of M/s. Eveready Industries ....
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....rence in the impugned order. 5. Heard both sides. 6.1 As narrated above, the first issue is with regard to the requirement of including the value of clearances of export made by the appellant of the goods for which the exemption under Notification No. 30/2004 has been availed. 6.2 Rule 6 (6) (v) of the CENVAT Credit Rules, 2004 states that provisions contained in Sub-Rules (1), (2), (3) and (4) of Rule 6 shall not be applicable in case the excisable goods removed without payment of duty are cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002. For better appreciation, the said Rule is reproduced as under : "RULE 6. [Obligation of a manufacturer or producer of final products and a [provider of output service]. . . . (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - (i) ..... (ii) ..... (iii) ..... (iv) ..... (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or ..." Thus, as per Rule 6 (6) (v)....
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....before the Hon'ble High Court of Bombay in Repro India Ltd. (supra) wherein the Hon'ble High Court held that CENVAT credit used in the manufacture of final product being exported irrespective of the fact that final product are otherwise exempted by provisions of Rule 6(6)(v) of the CENVAT Credit Rules, 2004 are applicable. Further, I find that in the case of Salzer Controls Ltd. - 2003 (160) E.L.T. 1169 and Paras Ship Breakers Ltd. this Tribunal has held that non-execution of bonds are only technical lapse. Further, in the case of Well Known Polyester Ltd. (supra) wherein the exempted goods were exported without bond or LUT by an assessee who was not even registered without bond or LUT by an assessee who was not even registered with the Central Excise department. This Tribunal has held that execution of bond/LUT was only procedural lapse for which refund could not be denied." The said decision in M/s. Jolly Board Ltd (supra) has been upheld by the Hon'ble High Court of Bombay as reported in 2017 (50) S.T.R. 131 (Bom.). While analyzing the issue, the Hon'ble High Court has endorsed the view taken in M/s. Drish Shoes Ltd. (supra). 6.3.3 Further, the decisions in M/s. Lavino Kap....
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....final product. The intention of the legislation is to ensure that duty is not levied on the export goods or on inputs used in the manufacture of goods which is reflected in Rule 6(6)(v) ibid reproduced hereunder : "(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - (i) ....... (ii) ......... (iii) ....... (iv) ........ cleared for export under bond in terms of provisions of the (v) Central Excise Rules. 2002." Further, the Hon'ble High Court of Bombay in the case of Repro India Ltd. v. UOI reported in 2009 (235) E.L.T. 614 (Bom.) held as under :- "Even though Rule 6(1) of the Cenvat Credit Rules, 2004 provides that no Cenvat credit will be available in respect of the inputs used in the manufacture of exempted products. Rule 6(6)(v) of the Cenvat Credit Rules creates an exemption inter alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 2002. Considering the language of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 the petitioners are e....