TMI Blog2007 (12) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st March, 2006; (2) stationery books such as letter pads, etc., falling under Heading 48.20 of the First Schedule to Central Excise Tariff Act, 1985 liable to duty at 16% and (3) printed books and other products of printing industry falling under Heading 4901 of the First Schedule to Central Excise Tariff Act, 1985 which are chargeable to nil rate of duty. The printed books are entirely exported by the petitioners. 2. It is the case of the petitioners that they have taken Cenvat credit of the duty paid on the inputs used in the manufacture of aforesaid products namely packaged software, stationery books and printed books. The said credit is utilized for payment of duty on packaged software and stationery books. Refund in cash is claimed for credit which cannot be so utilized, to the extent it is attributable to printed books exported by it. The Assistant Commissioner of Central Excise, respondent No. 2 has accepted the Letter of Undertaking furnished by the petitioners on 17th August, 2006 vide his letter dated 29th August, 2006 and allowed the petitioners to clear all the dutiable goods (packaged software) as also excisable goods attracting Nil rate of duties (printed book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Rule 6(3)(b) by paying an amount equal to 10% of the total price of the exempted final product. Therefore, for the exempted goods cleared for export from their factory, the petitioner is liable to pay an amount equal to 10% of the price of such exempted goods as stipulated under Rule (3)(b) as the said Rule does not distinguish between clearances for home consumption or export clearance but includes all clearances from the factory. As far as printed books are exempted goods/goods chargeable to nil rate of duty, they cannot be allowed to be cleared under the Bond and the petitioner has to follow the ARE-2 procedure for claiming refund of the duty on the contents of the exempted goods. These directions issued, it is stated, are as per law. An additional affidavit was filed by A.K. Prasad working as Commissioner of Central Excise, Belapur pursuant to the directions of this Court. It is set out therein, that in respect of the export bond/Letter of Undertaking is taken under Rule 19 of the Central Excise Rules, 2002 to protect the revenue in those cases where export does not take place but diverted for home consumption. The goods which are subject to nil rate of duty in Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 13. As per the Board's Circular No. 471 /37/99-CX dated 20-7-99, even the manufacturers of goods attracting nil rate of duty or wholly exempted goods can obtain registration under Rule 174 for the purpose of exporting their goods. Obviously, such manufacturer can, after obtaining registration as permitted vide aforesaid circular, export their goods only under bond in terms of Rule 13 and not in terms of Rule 12 as such goods cannot be exported on payment of duty and rebate claimed under Rule 12." Thus the Ministry of Finance vide letter dated 8th November, 2001 has specifically clarified that even the exempted goods can be cleared for export under bond in terms of Rule 13 of the erstwhile Central Excise Rules, 1944, which is pari materia with Rule 19 of the Central Excise Rules, 2002. The Circulars issued by the Central Government are binding on the Central Excise Department. The Madras High Court in Tamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd. v. Assistant Collector of Central Excise, Erode, 1978 (2) E.L.T. (J57) has expressly held that the goods figuring in the Schedule to Central Excise Tariff Act for which duty specified is Nil are also exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat Credit Rules, 2004 are not attracted. By denying to the petitioner from exporting the printed books under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. In our opinion this is wholly impermissible. The provisions as now contained in Rule 6 of the Credit Rules, 2004 were contained in Rules 57C and 57CC of the Central Excise Rules, 1944 as they stood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. It dealt with the question whether 8% has to be paid on the sale price of exempted goods Under Rule 6(3)(v) of Cenvat Credit Rules, 2004, to 8% has been increased to 10%. The relevant portion of the Circular dated 8th November, 2001 reads as under :- "Further, it is now clearly and specifically mentioned in Rule 57AD(4) that the provisions relating to non-availability of Modvat credit and reversal @ 8% is not applicable in case the exempted goods are cleared for export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t taxes but only to export the goods. If the inputs like engine going into the manufacture of export commodity namely tractors are subject to excise duty, the Indian manufacturer of tractors becomes internationally uncompetitive. This appears to be the object behind the Government enacting special scheme to ensure that the duty is not levied even on inputs going to the export products. Rule 6(6)(v) has been consciously and expressly enacted with the specific objective to ensure that duty is not levied even on inputs going to the export products. This method of adjustment, both from the point of Government and the assessee is to allow the assessee to take Cenvat credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, Cenvat credit is refunded in cash. This appears to be the Scheme of Rule 5 of the Cenvat Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6(6)(v) of the Cenvat Credit Rules, 2004 to the effect that the bar created by Rule 6(1) will not apply for goods exported. Considering the conscious and express p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tronic Hardware Technology Park or Software Technology Park; or (v) 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 GSR 602(E) dated the 28th August, 1995; or (vi) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002." We may reproduce Rule 6(6) of the Cenvat Credit Rules, 2002, which read as under:- "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 per cent 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 G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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