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2019 (6) TMI 362

ailed - Rule 6 (6) (v) of the CENVAT Credit Rules, 2004 - HELD THAT:- Rule 6 (6) (v) of the CENVAT Credit Rules, 2004 states that provisions contained in Sub-Rules (1), (2), (3) and (4) of Rule 6 shall not be applicable in case the excisable goods removed without payment of duty are cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002 - Thus, as per Rule 6 (6) (v) of the CENVAT Credit Rules, 2004, when exempted goods are cleared for export under bond, the bar under Rule 6 (1) ibid not to avail credit on common inputs/input services is not applicable - Thus, even if the exempted goods are exported, credit is eligible. Whether the amendment brought forth to do away with the requirement to execute a bond while exporting exempted goods would change the situation? - HELD THAT:- The Tribunal in M/s. Jolly Board Ltd. [2014 (3) TMI 124 - CESTAT MUMBAI] had occasion to consider the issue post amendment vide Notification No. 42/2001. In paragraph 7 of the said judgement, the Tribunal, after referring to the decision in M/s. Repro India Ltd. [2007 (12) TMI 209 - BOMBAY HIGH COURT], has held that the requirement for execution of a bond is only a procedural .....

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emption under Notification No. 30/2004; (ii) Clearance for export (DEPB clearance) claiming exemption under Notification No. 30/2004; (iii) Clearance for export under duty drawback scheme claiming exemption under Notification No. 30/2004; (iv) Clearance without payment of duty under Notification No. 30/2004 for manufacture of fabrics on job work basis; (v) Clearance on payment of duty under claim for rebate under Notification No. 29/2004; (vi) Clearance of yarn waste without payment of duty. 2.2 According to Rule 6 of the CENVAT Credit Rules, 2004, to compute the value of exempted clearances, the appellant has to take into account the value of clearances mentioned against Serial Nos. (i), (ii), (iii), (iv) and (vi) so as to arrive at the value of exempted goods cleared. However, the appellant reversed the credit without taking into account the value of exempted clearances mentioned against Serial Nos. (ii), (iv) and (vi) above. Thus, the appellant had not taken into account the clearances for export claiming exemption under Notification No. 30/2004, clearances without payment of duty under Notification No. 30/2004 manufactured on job work basis and clearances of yarn waste without .....

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t as per Rule 6 (6) (v) of the CENVAT Credit Rules, when the goods are exported under bond, the obligation of the manufacturer not to take credit on common inputs used for manufacture of dutiable and exempted products is not applicable. In the present case, the appellants have exported the entire goods and this is not disputed by the Department. The case of the Department is that as per the amendment in Notification No. 42/2001-C.E. (N.T.) by virtue of Notification No. 24/2010-C.E. (N.T.) dated 26.05.2010, a bond is not required for export of exempted goods. It is submitted that execution of a bond is only a procedural requirement and even if no bond is executed, the said provision would apply. In the case of exempted goods, there is no liability to pay duty for which reason the requirement to execute bond is given away with by bringing the amendment in Notification No. 42/2001. 3.3.2 The Department is of the view that since the appellant has not executed a bond, the credit availed on the goods exempted from duty as per Notification No. 30/2004 and exported, are not eligible for credit. He argued that even though the goods are exempted from duty, when exported, the credit on inputs .....

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ed in waste is eligible for credit and therefore, not required to be reversed. The Board has issued Supplementary Instructions after the introduction of the CENVAT Credit Rules, clarifying this aspect. He referred to paragraph 3.7 of the said Instructions to argue that CENVAT Credit is admissible in respect of inputs contained in any waste, refuse or by-product. The period involved is from 2009 to 2011 (September 2011) and that the said Instructions are binding on the Department. He argued that the reversal of proportionate credit made by the appellant is in order and that the demands made in the Show Cause Notice as regards the issue contested in this appeal are illegal. 3.4.2 He relied upon the decision in the case of M/s. Eveready Industries India Ltd. Vs. Commissioner of Customs, Central Excise and Service Tax, Noida reported in 2018-TIOL-2135-CESTAT-ALL to submit that the said Supplementary Instructions, observing that credit on inputs contained in waste is eligible, were referred to by the Tribunal to hold that credit of inputs contained in waste is eligible. 3.5 The Ld. Advocate has also argued on the ground of limitation. He submitted that the Show Cause Notice for the peri .....

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oved without payment of duty are cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002. For better appreciation, the said Rule is reproduced as under : RULE 6. [Obligation of a manufacturer or producer of final products and a [provider of output service]. . . . (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) .…. (ii) .…. (iii) ….. (iv) ….. (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or … Thus, as per Rule 6 (6) (v) of the CENVAT Credit Rules, 2004, when exempted goods are cleared for export under bond, the bar under Rule 6 (1) ibid not to avail credit on common inputs/input services is not applicable. 6.3.1 The demand has been raised stating that Notification No. 42/2001 has done away with the requirement to exclude a bond when exempted goods are exported. In the case of M/s. Drish Shoes Ltd. (supra), the Hon ble High Court has analyzed the issue as to whether credit is eligible on the duty paid on inputs and input services used in the manufacture of exem .....

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ds were exported without bond or LUT by an assessee who was not even registered without bond or LUT by an assessee who was not even registered with the Central Excise department. This Tribunal has held that execution of bond/LUT was only procedural lapse for which refund could not be denied. The said decision in M/s. Jolly Board Ltd (supra) has been upheld by the Hon ble High Court of Bombay as reported in 2017 (50) S.T.R. 131 (Bom.). While analyzing the issue, the Hon ble High Court has endorsed the view taken in M/s. Drish Shoes Ltd. (supra). 6.3.3 Further, the decisions in M/s. Lavino Kapur Cottons Pvt. Ltd (supra) as well as M/s. GPI Textiles Ltd.(supra) are judgements wherein the eligibility of credit on input services for the goods exported after availing the exemption under Notification No. 30/2004 was considered. The relevant paragraph of M/s. Lavino Kapur Cottons Pvt. Ltd (supra) is noticed as under 7. The appellant availed Cenvat credit on input service used in the manufacture of their final products. The department denied them the credit on service paid on input service on the ground that they have exported the goods while claiming the benefit of Notification 30/2004. Th .....

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reported in 2009 (235) E.L.T. 614 (Bom.) held as under :- Even though Rule 6(1) of the Cenvat Credit Rules, 2004 provides that no Cenvat credit will be available in respect of the inputs used in the manufacture of exempted products. Rule 6(6)(v) of the Cenvat Credit Rules creates an exemption inter alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 2002. Considering the language of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 the petitioners are entitled to avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt. (Underline supplied) So far as the decision cited by the learned AR in the case of Suryamitra Exim Pvt. Ltd. v. CCE, Guntur reported in 2012 (283) E.L.T. 504, the export related to frozen shrimps and frozen fish which are attracting no duty or nil rate of duty and the exception provided in respect of export bond should be read in the context of liability to duty, which is the primary condition for the purpose of allowing Cenvat credit under the Cenvat Credit Rules which is not t .....

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