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2020 (10) TMI 157 - AT - Central ExciseEligibility to avail CENVAT Credit - Export of exempted goods - denial of credit availed by the appellant in the ER-1 returns filed by them - It is the contention of the lower authorities that since after the amendment vide Notification no. 24/2010, the goods which are already exempted cannot be exported under bond for export outside India, the benefit of Rule 6(6) of the Credit Rules shall not be available to the appellant and hence, the appellant is not entitled to avail credit of duty paid on inputs used in the manufacture of exempted goods - HELD THAT:- Since the final product is exempted from payment of Central Excise duty no duty liability arises even if the same is cleared for domestic consumption. However, the appellant has cleared the said exempted goods for export outside India. The general provisions contained in Credit Rules provides that credit is not allowed to be claimed on inputs if the same is used in manufacture of exempted goods as would be clearly discernible on perusal of Sub-Rule (1) to (4) of Rule 6. However, Sub-Rule (6) of Rule 6 carves out an exception to provide that if the goods are cleared to SEZ or a 100% EOUs, EHTP, etc the restrictions contained in the said rules shall not apply, clearly implying that final products which have been exported would not be denied of the input credit benefit - Provision has also been made in Rule 6(6)(v) to state that goods cleared for export under bond in terms of Central Excise Rules shall also not be denied input credit, which also clearly implies that assessee shall be allowed to avail credit on inputs used in exported manufactured goods. Subsequent amendment made in Notification No.42/2001 to do away with the requirement of following the bond related procedure in case of goods which are otherwise chargeable to ‘NIL’ rate of duty or wholly exempted is merely a procedure and has no relation whatsoever with the credit entitlement under Credit Rules. The disallowance of credit by both the authorities below in the instant case is not proper. The issue has already been dealt by the Tribunal in the case of JOLLY BOARD LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2014 (3) TMI 124 - CESTAT MUMBAI] wherein the Bench after applying the ratio decidendi laid down by the various High Courts observed that In this case, appellant has not executed any bond for export of the goods. If the goods are exempted, execution of bond was not required. Appellant are entitled for refund claim - It is also emphasised and constantly held by the Tribunal that the policy of the Govt. of India is to promote the export of goods and not to export the domestic taxes and levies so as not to render the goods costlier in international market and un-competitive. The appellant is duly entitled to avail credit and therefore, the impugned duty demand is not sustainable - Appeal allowed - decided in favor of appellant.
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