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TMI Blog2009 (1) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... rine 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 are not eligible to avail Cenvat Credit on input services as the final products were exempted. It was also held that Rule 6(6)(v) of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved without payment of duty and cleared for export under bond in terms of Central Excise Rules, 2002. Reliance was placed on the following case-laws: Jobelle Vs. Commissioner of Central Excise reported in 2007 (78) RLT 462 (CESTAT-Mum.) = 2006 (203) ELT 627. In the said case the Tribunal allowed refund of Cenvat credit of input though the finished products were exempted by liberally interpreting the provisions of Rule 6(5) of Cenvat Credit Rules. c) Both the lower authorities have erred in applying Rule 6 (1) of Cenvat Credit Rules, 2004 and rejected the refund claim. The said provision of Rule 6 (1) will not be applicable to the impugned goods as they are covered by clause (v) of sub-rule 6 of Rule 6 of Cenvat Credit Rules, 2004. d) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Drish Shoes Ltd. reported in 2006 (197) ELT 437. f) The important point is the export of goods and not execution of a bond. In certain cases, execution of bond is replaced with execution of letter of undertaking. Execution of bond is only a procedural aspect. g) It is not the intention of the government to provide benefit of Cenvat Credit on input/input services for goods exported only when such goods are dutiable goods and to deny when such goods are exempted. Such an interpretation is contrary to the government policies, provisions of Central Excise Acts and Rules. As the exporter of excisable goods will be burdened with duty on input/input services while exporter of dutiable goods is entitled for credit of duty in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there are certain situations wherein cenvat credit would be admissible even in respect of exempted goods/exempted services. Such situations are enumerated in Rule 6 of Cenvat Credit Rules. Here, we are concerned with Rule 6(6)(v) which reads as follows: (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002. 9.2 The interpretation is that in respect of the goods cleared under bond, cenvat credit on inputs/input service can be availed. Now, the lower authorities state that in the present case, the goods were not exported under bond and hence this provision will not be applicable. Once this provision is not applicable, Rule 6 (1) would come into play and the appellants cannot take any cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duty. In that case, the manufacturer exporter executes a bond with the Central Excise Authorities for the reason that he would produce proof of export. If the item is not exported and diverted to home consumption, the Revenue would be put to loss. In order to avoid such a loss, the exporter is required to execute a bond under Central Excise Rules. The Excise authorities interpret that Rule 6 (6) (v) would be applicable to only such of those exports wherein the final products which are dutiable do not discharge duty liability and the same are exported by executing a bond. This is a very narrow interpretation. If this interpretation is accepted, then the duty paid on the inputs and also the service tax paid on the input services used in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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