NBM INDUSTRIES Vs. COMMISSIONER OF CENTRAL EXCISE, RAJKOT

JUDGEMENT

(1.) IN this appeal, appellants are challenging the rejection of refund claim of Cenvat credit which was taken on the inputs used in the finished goods supplied to 100% EOUs. Refund claim made by the appellants in respect of Cenvat credit on the inputs used in the goods manufactured and cleared to Special Economic Zone, has been allowed but in respect of clearances to 100% EOU, the same has been denied on the ground that it was only a deemed export and not a real export.

(2.) LD . Advocate on behalf of the appellants submits that the Honble Supreme Court in the case of Virlon Textile Mills Ltd. [2007 (211) E.L.T. 353 (Supreme Court)] has held that deemed export are equivalent to physical export. Further, he also drew my attention to circular issued by the Board wherein draw back was allowed in respect of deemed exports also. He also cited the decision of the Tribunal in Sanghi Textile Ltd. reported in 2006 (206) E.L.T. 854 (Tri. -Bang.)], wherein it was held that deemed credit can be availed for the goods which are cleared to 100% EOU and refund claim of deemed credit is admissible. On the other hand, learned DR relies on the decision of Honble Madras High Court in the BAPL Industries Limited case [2007 (211) E.L.T. 23 (Madras)] and also the decision of the Tribunal in the case of Quality Screens [2008 (226) E.L.T. 608 (Tri. -Mumbai)].

(3.) I have considered the submission made by both the sides. I find that the decision of the Tribunal in the Sanghi Textile Ltd. is a Divisional Bench decision and this was not referred to in the decision of the single member in the case of Quality Screens. I also find that the decision of the Divisional Bench of the Tribunal in Sanghi Textiles relates to Rule 5. Further, as submitted by ld. Advocate, Rule 5 provides refund in respect of goods which are used in the intermediate product cleared for export also. Now that 100% EOUs are eligible for Cenvat credit and when they pay duty in respect of DTA sales, credit is admissible to the recipients, I agree, that the Cenvat credit is to be allowed. Accordingly, the appeal is allowed with consequential relief to the appellants.