TaxTMI 
TaxTMI 
2025 (1) TMI 417
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....of the Central Excise Act, 1944. In addition to the exempted products, the Appellant were manufacturing certain products chargeable to duty under Central Excise Act, 1944. By virtue of availment of said notification, the goods cleared by the Appellant for home clearances were exempted from payment of central excise duty. The Appellant was maintaining a common account for exempted as well as dutiable products and availing Cenvat credit on the input and input services used in or in relation to manufacture of exempted as well as dutiable products under Rule 6(3) of Cenvat credit rules, 2004. Accordingly, in the present case when the exempted products are cleared for export, the Appellant paid an amount equal to 5.15% /6.18% by debiting from common Cenvat credit account, under Rule 6(3) of Cenvat Credit Rules 2004, of the value of exempted products exported out of India from its Cenvat credit account. 1.2 After reversal of Cenvat Credit in terms of Rule 6(3) of Cenvat Credit Rules, 2004. The appellant realized that as per the Rule 6(6)(v) of Cenvat Credit Rules, 2004. The appellant are eligible for Cenvat Credit even if the goods are cleared without payment of duty for export ....
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....on No. 4/2006-CE their clearance is not covered by notification no. 42/2001-CE (NT) and consequently rule 6(6)(v) is not applicable in their case hence, the appellant have rightly reversed the Cenvat amount in terms of Rules 6(3) of Cenvat Credit Rules 2004, consequently there is no question of refund of the said amount. He placed reliance on the following judgment: • 2017 (358) ELT 664 (Tri.-Mum) - CCE, Nashik Vs. Nashik SSK Ltd • 2018 (362) ELT 492 (Tri.-Hyd) - CCE, TIrupati Vs. SNJ Sugars & Products Ltd 4. We have carefully considered the submissions made by both the sides and perused the records. We find that in the present case the appellant have reversed the amount in terms of Rule 6(3) in respect of the exempted goods under Notification No. 4/2006-CE and cleared for export and for the said reversal the appellant filed the refund claim. On the identical issue in the appellant's own case where the revenue had demanded the amount under rule 6(3) in respect of the similar nature of export this tribunal vide order no. 11450-11451/2023 dated 07.07.2023 held that the appellant was not required to pay an amount under rule 6(3) of Cenvat Credi....
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.... the Table aforesaid. Explanation.- For the purposes of this notification, the rates specified in column (4) of the said Table are ad valorem rates, unless otherwise specified. S. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No 54 28, 29 or 30 The bulk drugs or formulations specified in List 3 Nil - 59 30 Formulations manufactured from the bulk drugs specified in List 1. Explanation. - For the purposes of this notification, the expression "formulation" means medicaments processed out of or containing one or more bulk drugs, with or without the use of any pharmaceuticals aids (such as diluent, disintegrating agents, moistening agent, lubricant, buffering agent, stabiliser or preserver) which are therapeutically inert and do not interfere with therapeutical or prophylactic activity of the drugs, for internal or external use, or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include any substance to which the provisions of t....
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....inciples of valuation contained in the Excise Act and the rules made there under. Explanation 3. For the purposes of this rule, exempted services as defined in clause (e) of rule 2 shall include an activity, which is not a 'service' as defined in section 658(44) of the Finance Act, 1994 (provided that such activity has used Inputs or input services]. Explanation 4. - Value of such an activity as specified above in Explanation 3, shall be the invoice/agreement/contract value and where such value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Finance Act, 1994 and the rules made thereunder.] ((2) A manufacturer who exclusively manufactures exempted goods for their clearance upto the place of removal or a service provider who exclusively provides exempted services shall pay the whole amount of credit of input and input services and shall, in effect, not be eligible for credit of any inputs and input services.) [(3) (a) A manufacturer who manufactures two classes of goods, namely:- (i) non-exempted goods removed; (ii) exempted goods remo....
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....----------------------------------------------------- [(5) ------------------------------------------------------------------------- (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) cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorised operations; or] (ii) cleared to a hundred per cent. export-oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995, number G.S.R. 602(E), dated the 28th August, 1995; or [(iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of Notification No. [....
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....from the date of provision :) (Provided that if such payment is received after the specified or extended period allowed by the Reserve Bank of India but within one year from such period, the service provider shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier in terms of sub-rule (3) to the extent it relates to such payment, on the basis of documentary evidence of the payment so received.] From the above rule it can be seen that the demand of an amount under Rule 6(3) of Cenvat Credit Rules, 2004 shall arise only in case where the input or input service is commonly used in the manufacture of dutiable and exempted goods. As opined by us herein above since appellant have not availed the exemption Notification No. 4/2006-CE question of application of rule 6(3) does not apply. Moreover in respect of the goods cleared under claim for rebate the appellant have admittedly paid the excise duty. Once the excise duty has been paid the demand under rule 6(3) shall not be sustainable. 4.4 without prejudice we also find that in catena of judgments, it has been held that even though if on any product duty is not payable for a....
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....ds subject to duty, because the term used in sub-rule (6) is "excisable goods" and not "exempted goods", as was the case in Rules of 2002. 12. Reference has been made hereinabove to the Rules of 2002, as also 2004, because from the record, it cannot be made out which rules should be applicable. Rules of 2002 were applicable in respect of inputs or capital goods received in the factory after 1st day of March, 2002. They remained in force till the Rules of 2004 came into force. Rules of 2004 are applicable in respect of inputs received by the manufacturer after 10th day of September, 2004. Since finished leather was exported between August, 2004 and March, 2005 and it was not clear as to when the inputs were received, so reference has been made to both the sets of rules. As already noticed, the provisions of both the rules are similar, except that under the Rules of 2002, exception contained in sub-rule (5) of Rule 6 was applicable only to the exempted goods, while under the Rules of 2002, exception applies to all excisable goods, irrespective of the fact whether they are exempted or subject to levy of duty. 13. Assistant Commissioner file, rejecting the claim of th....
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.... 18. Learned counsel for the appellant argued that term 'excisable goods' used in sub-rule (6) of Rule 6 of 2004 Rules, meant only dutiable goods. Submission has been noticed only to be rejected. 19. A Division Bench of Bombay High Court in 2009 (235) E.LT. 614 (Bom.), Repro India Ltd. v. Union of India, while dealing with a similar situation and interpreting the provisions of Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, has held that expression" excisable goods" is wider than the expression" exempted goods", as it includes both dutiable as also exempted goods. 20. In view of the above discussion, we hold that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. Question No. 1 is answered accordingly. 21. As regards question No. 2, it is clear from a bare reading of Rule 5 of CENVAT Credit Rules, 2004 that a manufacturer, who exports the final pr....
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....e Notification does not make any distinction between the dutiable and exempted goods nor debars the exempted goods from export under Rule 13. Exempted goods are excisable as having been manufactured and covered under Schedule to CETA 1985 and as such are eligible to be exported under Rule 13. As per the Board's Circular No. 471/37/99-CX dated 20-7-99, even the manufacturers of goods attracting nil rate of duty or wholly exempted goods can obtain registration under Rule 174 for the purpose of exporting their goods. Obviously, such manufacturer can, after obtaining registration as permitted vide aforesaid circular, export their goods only under bond in terms of Rule 13 and not in terms of Rule 12 as such goods cannot be exported on payment of duty and rebate claimed under Rule 12." Thus the Ministry of Finance vide letter dated 8th November, 2001 has specifically clarified that even the exempted goods can be cleared for export under bond in terms of Rule 13 of the erstwhile Central Excise Rules, 1944, which is pari materia with Rule 19 of the Central Excise Rules, 2002. The Circulars issued by the Central Government are binding on the Central Excise Department. ....
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....ks respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted products are exported outside India the provisions of Rule 6(6)(v) of the Cenvat Credit Rules are applicable. Therefore, the bar provided under Rule 6(1) and the liability created under Rule 6(3)(b) of the Cenvat Credit Rules, 2004 are not attracted. By denying to the petitioner from exporting the printed books under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. In our opinion this is wholly impermissible. The provisions as now contained in Rule 6 of the Credit Rules, 2004 were contained in Rules 57C and 57CC of the Central Excise Rules, 1944 as they stood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. It dealt with the question whether 8% has to be paid on the sale price of exempted goods. Under Rule 6(3)(v) of Cenv....
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....t is exported it calls for a special relaxation/dispensation to make the goods of the country internationally competitive. As an illustration suppose a final product like tractor is otherwise exempted from excise duty even for domestic consumption and such tractors are exported. The various inputs like engines, etc., used in the tractor may have suffered excise duty. The intention is not to export taxes but only to export the goods. If the inputs like engine going into the manufacture of export commodity namely tractors are subject to excise duty, the Indian manufacturer of tractors becomes internationally uncompetitive. This appears to be the object behind the Government enacting special scheme to ensure that the duty is not levied even on inputs going to the export products. Rule 6(6)(v) has been consciously and expressly enacted with the specific objective to ensure that duty is not levied even on inputs going to the export products. This method of adjustment, both from the point of Government and the assessee is to allow the assessee to take Cenvat credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other ....
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.... the Cenvat Credit Rules, 2002 which reads as follows:- "(5) The provisions of sub-rule (1), sub-rule (2), sub-rule (3) and sub-rule(4) shall not be applicable in case the exempted goods are either - (i) cleared to a unit in a free trade zone; or (ii) cleared to a unit in a special economic zone; or (iii) cleared to a hundred per cent export oriented undertaking; or (iv) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (v) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995, number GSR 602(E) dated the 28th August, 1995; or (vi) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002." We may reproduce Rule 6(6) of the Cenvat Credit Rules, 2002, which read as under:- "The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable g....
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....ds exported. In order to cover such a situation also, Rule 6(6) of Cenvat Credit Rules, 2004 used the expression 'excisable goods' which is wider to include both dutiable as well as exempted goods. 10. In our opinion therefore, the petition will have to be allowed. The Petitioners are entitled to remove the goods on furnishing the bond as set out in Annexure 16 in Form B-1 of the Central Excise Manual. Rule mode absolute accordingly. There shall be no order as to costs." 4.5 As regards the goods cleared for export under bond it is undisputed that the appellant have consciously cleared the goods under Bond/ LUT. The LUT has been accepted by the department officers, the export consignments have been assessed accepting the clearances under Bond/LUT. In such case in terms of Rule 6(6)(v) of Cenvat Credit Rules, 2004 the provision of sub Rules (1), (2), (3) and (4) shall not be applicable in cases the goods removed without payment of duty, therefore in case of goods cleared under Bond/LUT also the demand under Rule 6(3) of Cenvat Credit Rules, 2004 will not sustain. The contention of the revenue is that during the relevant time under the Notification No. 42/200....
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....8) ELT 783 (T) - Alpha Drug India Ltd. (f) 1996 (82) ELT 256 (T) - Hunsur Plywood Works 4.8 Without prejudice to the above findings, we further find that in any case Cenvat credit cannot be denied on the inputs in case the finished goods wherein such inputs were used, exported out of country. Various mechanisms were provided for giving relief of input duty such as drawback, procurement of input without payment of duty under Notification No. 43/2001-CE(NT), rebate of duty of inputs, in terms of Rule 18 of Central Excise Rule 2012, refund of Cenvat of input used in export goods in terms of Rule 5 of Cenvat Credit Rules. Under all this scheme government has ensured that the input used in the manufacture of export goods should not suffer duty or if at all any duty is paid the same should be refunded. In other words, in the overall policy for export of goods, neither the duty on inputs nor the duty of finished goods should be exported. With these objective if the demand under Rule 6(3) is made, all these schemes which is with the objective that no duty should be charged on input will be defeated. For this reason also the duty paid on the inputs which is used in export ....
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....ain. Accordingly, the penalty is set aside. 5. As per our above discussion and findings, the demand under Rule 6(3) of Cenvat Credit Rules, 2004 in the impugned order is not sustainable on merit as well as on limitation. Hence, we set aside the impugned order and allow the appeals." From the above detailed order in the appellant's own case it can be seen that the appellant is not required to pay an amount under rule 6(3) of Cenvat Credit Rules in respect of the goods exported under Notification No. 4/2006-CE in terms of rule 6(6)(v) of Cenvat Credit Rules, 2004. Therefore in the present case since the appellant have paid the amount which is otherwise not payable they are clearly entitled for the refund of same. In the order of the authorities below it was contended that the appellant have reversed the amount under rule 6(3) which is not excise duty therefore the refund of the same is not under section 11B of Central Excise Act, 1944, for this reason also the refund is not admissible. In this regard we find that the appellant have reversed the Cenvat Credit amount in terms of rules 6(3) therefore claiming refund of the same amount is nothing but seeking a cre....