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Commissioner of Central Excise, Customs and Service Tax Belgaum Versus Alfa Exports (100% EOU)

2017 (1) TMI 661 - CESTAT BANGALORE

100% EOU - Refund of unutilised credit u/r 5 of CCR - rejection on the ground of nexus - Held that: - Commissioner (Appeals) has allowed the appeal of the assessee on the basis of the decision of CESTAT, Bangalore in the case of ANZ International [2007 (11) TMI 218 - CESTAT, BANGALORE], where it was held that Rule 5 of the CENVAT Credit Rules provides for refund of Cenvat credit where the appellants are not able to utilize the same - appellants had availed Cenvat credit and they were not in a po .....

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ed - decided against Revenue. - ST/CROSS/162/2010 in ST/1031/2009-SM - Final Order No. 21202/2016 - Dated:- 17-11-2016 - Shri S.S Garg, Judicial Member Shri Parashiva Murthy, AR - For the Appellant None - For the Respondent ORDER The present appeal filed by the Revenue is directed against the impugned order passed by the Commissioner (Appeals) dated 18.09.2009 vide which the Commissioner (Appeals) has allowed the appeal of the respondent seeking refund of unutilized cenvat credit under Rule 5 of .....

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ly) before the Assistant Commissioner, Bellary under Rule 5 of the Cenvat Credit Rules on input services like Telephone Service, Clearing and Forwarding, Business Auxiliary Service, Crushing and Screening, Technical Testing, Transport of Goods by Road up to Port, Erection and Commissioning Service which were used in or in relation to manufacture of product manufactured by them viz. Iron Ore Fines/Lumps falling under Chapter heading 2601 of Central Excise Tariff Act 1985 during the period from Fe .....

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ent appeal. 2. I have heard the learned AR. None has appeared on behalf of the respondent. 3. The learned AR submitted that the impugned order is not sustainable in law as the assessee is not entitled for cenvat credit on input or input services in terms of provisions contained in Rule 6(1) of Cenvat Credit Rules 2004 as the final product said to have been manufactured by them is unconditionally exempted from payment of duty or chargeable to nil rate of duty. He further submitted that the goods .....

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alers for the manufacture of the finished products which are to be exported. They availed Cenvat credit on the duty paid inputs. Since they were not in a position to utilize the credit, they applied for refund of the Cenvat credit availed by them. The reason is that all their products were exported and there was no domestic clearance. The lower authority rejected the refund claims on the ground that in terms of sub-rule(1) of Rule 6 of CENVAT Credit Rules, the appellants could not have taken cre .....

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les, even the credit could not have been availed. Once the appellants are not entitled for the credit, there is no question of refunding the same. This is the argument of the Revenue. The learned Commissioner (Appeals) upheld the orders of the lower authority. 5.3 On a very careful consideration of the issue, I find that the lower authorities have held that credit of duty paid on inputs is not admissible by virtue of Rule 6(1) of the CENVAT Credit Rules. However, they have not properly appreciat .....

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cleared to a unit in an Electronic Hardware Technology Park of 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 (v) cleared for export under .....

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titive Bidding in terms of Notification No. 6/2002-Central Excise dated the 1st March, 2002 or Notification No. 6/2006-Central Excise dated the 1st March, 2002, as the case may be. On a careful reading of Rule 6(6) of the CENVAT Credit Rules, it is very clear that the provisions of sub-rule (1), (2), (3) and (4) shall not be applicable to goods removed without payment of duty, which are actually cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002. The lower .....

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certain circumstances, when duty is paid on the inputs, then the appellants are entitled for the Cenvat credit. There is nothing in the Rules which prohibits 100% EOUs availing Cenvat credit. Rule 5 of the CENVAT Credit Rules provides for refund of Cenvat credit where the appellants are not able to utilize the same. In the present case, this is precisely the case. The appellants had availed Cenvat credit and they were not in a position to utilize the same for the simple reason that all the prod .....

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vat credit on inputs and packing materials are admissible in terms of Rule 5 of the Cenvat Credit Rules. In view of this clear position, I hold that the 100% EOU is entitled to take Cenvat credit on the duty on the inputs procured indigenously and when they are not in a position to utilize the same, they are entitled for the benefit of the refund under Rule 5 of the CENVAT Credit Rules. Therefore, the impugned Orders have no merits. They are liable to be rejected. Hence, I allow the appeals with .....

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ing regard to the undisputed fact that the respondent is 100% Export Oriented Unit (for short ECU ) in respect of which, benefit of CENVAT Credit Rules, 2004 is available for the inputs which will be used for manufactured goods of 100% export. Therefore, the Tribunal has applied Rule 6(6) and recorded the reasons stating that there is a provision of exporting the goods under bond. In the case of 100% EOUs, the input can be imported free of duty and they can obtain indigenously also free of duty. .....

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