TMI Blog2010 (5) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... 008, dated 3-10-2008, passed by the Customs, Excise and Service Tax Appellate Tribunal was admitted on the following questions of law : (1) Whether an assessee exclusively manufacturing wholly exempted goods (chargeable to NIL tariff rate of duty) is eligible to avail CENVAT credit of duty paid on the said inputs and input services under Rule 6(1) of the CENVAT Credit Rules, 2002/CENVAT Credit Rules, 2004, used in the manufacture of such exempted goods, even if such goods are exported. (2) Even if such credit is presumed to be available such manufacturer of wholly exempted goods can claim refund of CENVAT credit of duty paid in respect of inputs and input services used in the manufacture and export of the said wholly exempted final prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules read with Notification No. 11/02 dated 1-3-2002 the bond/LUT is only required to be furnished with the department where there is duty liability on the exported goods. In the instant case the goods i.e. finished leather falling under Ch. 41 are chargeable to nil rate of duty, hence there was no need to export the goods under bond/ LUT as the bond/LUT is only required to safeguard the duty involved on export goods. In case the goods meant for export are not exported out of India or not exported within the stipulated period, the bond equivalent of duty amount is necessary to be furnished in order to safe guard the govt., revenue involved on the goods intended for export. (2) that, Rule 6(1) of the rules, states that " The CENVAT c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties and gone through the record and the relevant rules. 8. It is not in dispute that the respondent is engaged in the manufacture of finished leather and that it had exported manufactured leather as claimed by it. The only question is whether under the CENVAT Credit Rules of 2002 or 2004, it is entitled to the credit/refund of CENVAT paid on inputs, like chemicals etc. purchased by it, to convert raw leather into finished leather. 9. Rule 3 of the CENVAT Credit Rules, 2004, as also Rule 3 of CENVAT Credit Rules, 2002, which have been repealed by the Rules of 2004, provide for credit of CENVAT paid by a manufacture on any inputs or capital goods received in a factory for use in or in relation to the manufacture of final products. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nabove 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured goods which are not exempt from duty, as is clear from a combined reading of Rule 3 and sub-rule (1) of Rule 6 of the CENVAT Credit Rules, 2002, as also the Rules of 2004, so as to avoid indirect double taxation on inputs. However, this rule is not absolute. It is subject to exception clause, contained in Rule 6(5) of the Rules of 2002 and 6(6) of the Rules of 2004, and one of the exceptions is in respect of excisable goods, which are cleared for export under bond in terms of the provisions of Central Excise Rules, 2002. 17. Sub-rule (5) of Rule 6 of the Rules of 2002 was applicable only in case of exempted goods. That meant that the exception was not applicable in case of dutiable goods. It appears that this led to anomalous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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