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2020 (2) TMI 902 - AT - Central ExciseCash refund of CENVAT credit - CENVAT credit on inputs cleared as such by the supplier - rejection on the ground that the credit was availed by the EOU unit on the goods received from the DTA unit, by reversing/payment of duty through CENVAT Credit which was not admissible to the said DTA unit on inputs cleared as such - Rule 5 of CCR - HELD THAT:- On plain reading of the Rule 11(3), it is clear that the manufacturer of a final product shall be required to pay an amount equivalent to the CENVAT Credit taken by him in respect of the inputs received for use in the manufacture of final product and lying in stock or is contained in the final product if he opts for exemption on the final product, whereas on the other hand, Rule 3(5) of CENVAT Credit Rules, 2004 allows the manufacturer to clear the inputs ‘as such’ from the factory or premises of the provider of the output service, on payment of an amount equivalent to the credit availed in respect of such inputs and the removal shall be made in accordance with Rule 9 of CENVAT Credit Rules, 2004 i.e. against proper invoice - Both the said rules operate in different spheres and do not overlap. In the present case, the Appellants received the inputs when the final product was dutiable, on its exemption, chose to clear the inputs lying in stock ‘as such’ following the procedure laid down in Rule 3(5) of CENVAT Credit Rules, 2004 without its use in the manufacture of exempted final product - If the argument of the Revenue is accepted that the credit attributable to the inputs lying in stock would lapse, then the Appellants would be required to clear the inputs as such either without payment of duty or reversal of credit again on the same quantity of inputs on its clearance as such which would lead to an absurd situation and it cannot be intended by the legislature. Therefore, clearance of the inputs lying in stock as on 01.03.2007, after reversal of the credit following the procedure laid down under Rule 3(5) of CENVAT Credit Rules, 2004 is in harmony with Rule 11(3) of CENVAT Credit Rules, 2004 and not in conflict - Hence, reversal of credit on the inputs cleared as such, is in accordance with the law. Whether 100% EOU unit is entitled to refund the accumulated CENVAT Credit of ₹ 78,97,716/- under Rule 5 of CENVAT Credit Rules, 2004 on export of the finished goods? - HELD THAT:- Since the DTA unit has correctly reversed the credit on the inputs cleared as such to their 100% EOU unit, who in turn, availed the credit and utilised the same in the manufacture of exported goods, cash refund of accumulated CENVAT Credit of ₹ 78,97,716/- under Rule 5 of CENVAT Credit Rules, 2004 cannot be held to be inadmissible to the EOU unit. Appeal allowed - decided in favor of appellant.
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