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TMI Blog2018 (8) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... T Credit Rules, 2004, for the period July 2008 to June 2009 (in CEA Nos.3 & 52-54/2016) and from July 2009 to February 2010 (in CEA Nos.49 & 61- 62/2016). The assessee is manufacturer of Battery Operated Cars i.e., Electric vehicles falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985. Prior to 1.3.2008, the manufacture of the said cars attract central excise duty, but with effect from 1.3.2008, the same came to be exempted from payment of excise duty under the Notification issued by the Central Government. For the aforesaid two periods involved in both these appeals, assessee claimed refund of the accumulated CENVAT credit in terms of Rule 5 of the CENVAT Credit Rules, 2004. The adjudicating authority, however, rejected the said claim of refund of the assessee, but, the Tribunal held in favour of the assessee that the assessee was entitled to refund of the said CENVAT credit for the aforesaid periods following the two High Court decisions in the case of Repro India Ltd., -vs- Union of India {2009 (235) ELT 614 (Bom.)} and Commissioner of Central Excise -vs- Drish Shoes Ltd., {2010 (254) ELT 417(HP)}. Aggrieved by the said order of Tribunal, the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export. (3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed services, except in the circumstances mentioned in sub-rule (2). Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in Rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empted goods, denoted as A; (ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (provisional)=(B/C) multiplied by D, where B denotes the total value of exempted services provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of taxable services provided plus the total value of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A; (iii) the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services (provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G denotes total CENVAT credit taken on input services during the month; (c) the manufacturer of goods or the provider of output service, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount. (g) the manufacturer of goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central Excise, within a period of fifteen days from the date of payment or adjustment, as per condition (d) and (f) respectively, the following particulars, namely:- (i) details of CENVAT credit attributable to exempted goods and exempted services, monthwise, for the whole financial year, determined provisionally as per condition (b), (ii) CENVAT credit attributable to exempted goods and exempted services for the whole financial year, determined as per condition (c), (iii) Amount short paid determined as per condition (d), alongwith the date of payment of the amount short-paid, (iv) Interest payable and paid, if any, on the amount short-paid, determined as per condition (e), and (v) Credit taken on account of excess payment, if any, determined as per condition (f); (h) where the amount equivalent to CENVAT credit attributable to exempted goods or exempted services cannot be determined provisionally, as prescribed in condition(b), due to reasons that no dutiable goods were manufactured and no taxable service was provided in the preceding fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services. (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either- (i) cleared to a unit in a special economic zone; or (ii) cleared to a hundred percent. Export-oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or 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 bond in terms of the provisions of the Central Excise Rules, 2002; or (vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting; or (vii) all goods which are exempt from the duties of customs leviable under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification by the Board." 8. The relevant Notification under Rule 19 of the Central Excise Rules, 2002, was also produced before us for perusal and to submit that the conditions for availing such exemption on export were duly complied with by the assessee in the present case. The learned counsel for the assessee also submitted that the Proviso to Rule 5 of CENVAT Credit Rules, 2004, for denying the refund of credit inter alia on the ground where the assessee claim rebate of duty under Central Excise Rules, 2002, was also not applicable to the facts of case of the assessee, because, the rebate referred to in the said Proviso of Rule 5 of CENVAT Credit Rules, 2004, relates to the rebate under Rule 18 and not under Rule 19 of Central Excise Rules, 2002, which also quoted below for ready reference : "Rule 18. Rebate of duty.- where any goods are exported, the central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Repro India Ltd., (supra) held as under: "16. The Scheme of CENVAT Credit Rules, 2002, as also 2004, reference to the relevant provisions of which has been made hereinabove, shows that CENVAT credit/refund is allowed on the inputs of all 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 situations. For example, if the goods were dutiable and were exported, credit of CENVAT could not be claimed in respect of input of those goods, at least under the aforesaid exception clause. To overc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the 2006 notification. Therefore, upon executing the bond, the assessee removed what were otherwise excisable goods without payment of duty. 13.1. One of the exceptions to sub- rule(1) of Rule 6 is a circumstance, where excisable goods are exported pursuant to the executions of bond, in terms of Central Excise Rules, 2002. 14. Therefore, on a plain reading, we see no difficulty in the assessee's case falling in the exception carved out in Rule 6(6)(v) of the 2004 Rules. The purpose, apparently, behind carving out of such exceptions appears to be to neutralize the impact of the duties paid by the exporters, with regard to input tax, whether paid on goods or services. The objective, obviously is not to export duties, so as to provide much needed competitive edge to Indian exporter in foreign markets. 14.1 India is a party to the WTO regime and therefore, it is permissible for it to neutralize duties on inputs, whether in the form of goods or services. 15. Thus, having regard to the Rules, qua which we have rendered our view above, and the perceptible object as to why sub-rule (6) of Rule 6 of the 2004 Rules has been put in place, we are not inclined to interfere with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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