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2024 (3) TMI 913 - AT - Central ExciseCENVAT Credit - retention of credit that enabled obtaining of refund under rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- The appellant was exporting almost 98% of turnover for the period upto March 2010 and about 87% thereafter is a finding in the impugned order that has not been controverted in appeal of Revenue. That such exports should not have to bear the burden of duties inhering in the goods is undeniable and, therefore, if not refund under rule 5 of CENVAT Credit Rules, 2004, rebate was allowable under Central Excise Rules, 2002 with option left to assessee. The denial of credit was not enforced immediately upon grant of exemption; instead resort was had to section 11A of Central Excise Act, 1944 and, consequently, rebate was not an available option. This militates against the contention of Learned Authorized Representative that the cited Explanation has retrospective effect. The denial of credit was not enforced immediately upon grant of exemption; instead resort was had to section 11A of Central Excise Act, 1944 and, consequently, rebate was not an available option. This militates against the contention of Learned Authorized Representative that the cited Explanation has retrospective effect. We, therefore, examine the entitlement in terms of operation under the CENVAT credit scheme. As we have premised, this is a dispute about eligibility for retention of credit availed validly under rule 3 of CENVAT Credit Rules, 2004. It is only upon deployment of such goods in the production of ‘exempted goods’, which ‘menthol crystal’ was since 1st March 2008, that rule 6(1) of CENVAT Credit Rules, 2004 is brought to bear - to the extent that ‘inputs’ were deployed in goods that have been exported, availment of credit is not faulted. Even if exempted goods were removed on bond for export after March 2010, that procedural lapse, with its own attendant consequence, has no bearing on eligibility for retention of credit. Therefore, only the availment of credit in relation to ‘inputs’ used in production of domestically cleared goods remain. There can be no dispute on availment of credit of duty paid on attributable goods till March 2010 as these were cleared on payment of duty. For the period thereafter, it is on record that the default provision in rule 6(3) of CENVAT Credit Rules, 2004 for payment of 10% of value of exempted goods cleared domestically would entitle retention of credit. The impugned order, and appeal of Revenue, appear to have, in their respective contentions which do not relate to the same ‘input’, misconstrued the meaning of ‘common’ and the bar on ‘retention’ which are applicable to both categories of inputs – raw materials and consumables – that are used in production - None of the goods in the dispute are consumables and, owing to export as well discharge of duty liability or liability of 10% on value of domestically cleared goods, there is no scope for recovery under rule 14 of CENVAT Credit Rules, 2004 or section 11A of Central Excise Act, 1944. Other consequences too fail. The demand fastened on assessee in the impugned order does not sustain. Appeal of assesse is allowed.
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