TMI Blog2009 (1) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... any bond under central excise - C/299/2008 - 25/2009 - Dated:- 16-1-2009 - Shri T.K. Jayaraman, Member (Technical) Shri M.V. Ravindran, Member (Judicial) (Final Order No. 25/2009 dt. 16.1.2009 certified on 27.1.2009 in Appeal No. C/299/2008) Shri Girish, Adv. for Appellant. Ms. Sudha Koka, SDR for Respondent. Per T.K. Jayaraman : This appeal is filed against the Order-in-Appeal No. 155/2007 dated 12.12.2007 passed by the Commissioner of Customs (Appeals) Bangalore. 2. We heard both sides, 3. The appellant is a 100% EOU exporting Gherkins in Brine attracting NIL rate of duty under chapter heading 2001000. Gherkins in Vinegar or Acetic Acid is exempted vide Notification No. 6/2006-CE dated 01.03.2006. The appellants availed Cenvat credit of service tax and cess paid by them on input services for the period from 15.03.2006 to 31.10.2006 and 01.11.2006 to 31 01.2007. Since, the credit taken was not utilized, they applied for refund amounting to Rs. 9,43,693/- and Rs. 4,40,167/- in terms of Rule 5 of the Cenvat Credit Rules 2004. The lower authority rejected the refund claims in view of Rule 6 (1) of Cenvat Credit Rules, 2004 according to which, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities have rejected the refund claim of the appellant on the erroneous ground that the export of goods is not under bond in terms of Cenvat Credit Rules, 2004 in terms of clause v of sub-rule 5 of Rule 6. Reliance was placed on the following observations of this Bench in the case of ANZ International Vs. Commissioner of Customs, Bangalore (Appeals No. C/226 227/2007) [reported in 2008 (85) RLT 863 (CESTAT-Ban.)]. In the above case, this Hon'ble Tribunal has observed as under: 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 Central Excise Rules, 2002. The lower authorities were not prepared to give the benefit of this Rule to the appellant on the ground that these goods were exported under the 100% EOU Scheme and not under the Central Excise Rules, 2002. This approach is not correct. Any exported goods do not suffer the incidence of Central Excise duty. That is why, there is a provision for exporting the goods under bond……. e) The low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem, in the first instance, the appellants are not entitled to take credit of service tax paid on input services as the final products manufactured by them are exempted. If they are not eligible to take credit of service tax paid on the input services utilized in relation to the manufacture of final products exported, there is no question of refunding the same. In other words, the question of refund does not arise at all. Therefore, the claims had been rejected. 7. In order to appreciate the issues involved in this appeal, it is better to be very clear about the basic concepts of Central Excise Taxation and also taxes on services. Excise duty is a duty on the manufacture of goods. All goods manufactured in the country and consumed within bear the duty burden. In the manufacture of goods, various inputs are used, even input services are used in relation to the manufacture of excisable goods. The Cenvat Credit Scheme in respect of input goods and input services for payment of duty on final products and service tax on output services has been formulated to avoid the cascading effect of taxation. 8. The basic principle in excise taxation is that the excise duty/service tax shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normally consumes several inputs on which Customs/Central Excise duties had not been paid. If the goods are not exported and diverted to home consumption, to that extent there is revenue loss. For this reason, all 100% EOUs have to execute bond. There is also an export obligation for every 100% EOU. They execute a letter of undertaking with the Development Commissioner to fulfill the export obligations. In these circumstances, the export of goods by a 100% EOU should also be considered as export under bond. Once it is considered as export under bond, then Rule 6 (1) can not be applied. Therefore, the 100% EOU is entitled for availing credit of tax paid on input services. When such credit is not utilizable they can apply for refund of unutilized credit. 10. The lower authorities have reached an erroneous conclusion, because of a very narrow interpretation of the words 'export under bond' in terms of Central Excise Rules, 2002. Generally, in exports, one can export duty paid goods and claim for rebate. Otherwise, one can manufacture goods for export and export it without payment of duty. In that case, the manufacturer exporter executes a bond with the Central Excise Authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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