TMI Blog2019 (6) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 one and therefore, refund cannot be denied - The credit availed on input services is eligible and the contention of the Department that the credit has to be reversed is against the provisions of law. CENVAT Credit - input contained in the waste - Requirement of including the turnover of yarn waste cleared by the appellant - Department is of the view that the credit on inputs contained in the waste is not eligible and has to be reversed by the appellant - HELD THAT:- Paragraph 3.7 of the Supplementary Instructions issued by the Department after introduction of the CENVAT Credit Rules, 2002 states that credit is admissible on the amount of inputs contained in any waste, refuse or by-product. The argument of the Ld. AR for the Department that the appellants are manufacturing waste cannot be accepted. The appellants are not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount 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 payment of duty. 2.3 The Department was of the view that the appellant in doing so has short reversed the credit, for which a Show Cause Notice dated 17.06.2015 was issued proposing to recover the same along with interest and for imposing penalties. After due process of law, the Original Authority confirmed the demand, interest and imposed penalty. In appeal, the Commissioner (Appeals) vide impugned order dated 29.01.2018 upheld the order passed by the Original Authority in respect of not including the clearance for export claiming exemption under Notification No. 30/2004 as well as clearance of yarn waste wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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/input services used for the manufacture of finished goods is eligible. 3.3.3 To support this argument, he relied upon the decision in the cases of Commissioner of Central Excise Vs. M/s. Drish Shoes Ltd. reported in 2010 (254) E.L.T. 417 (H.P.) and M/s. Repro India Ltd. Vs. Union of India reported in 2009 (235) E.L.T. 614 (Bom.) . The decision in M/s. Drish Shoes Ltd. (supra) has been upheld by the Hon ble Supreme Court in SLP No. 2887 of 2012 . The decision in Union of India Vs. M/s. Sharp Menthol India Ltd. reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 period from 2009 to 2011 (September 2011) was issued on 17.06.2015. The appellant had reversed the credit according to their calculation, which is admitted by the Department. The Department has raised the demand alleging that further amount has to be reversed. In fact, the issue is only interpretational and therefore, the Show Cause Notice issued invoking the extended period of limitation cannot sustain. 4.1 Ld. AR Shri. L. Nandakumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . (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 exempted goods which are exported. The said question of law framed by the Hon ble High Court is quoted as under : (1) Whether an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of provisions of the (v) Central Excise Rules. 2002. Further, the Hon'ble High Court of Bombay in the case of Repro India Ltd. v. UOI 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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