JOLLY BOARD LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are in appeals against the impugned orders wherein refund claim filed under Notification No. 5/2006 was denied to them on the premise that as the appellant are manufacturers of exempted goods, therefore, as per rule 6(1) of the Cenvat Credit Rules, 2004 they are not entitled to take input credit. Consequently, they are not entitled to file refund claim under Notification No. 5/2006. Another reason for deny of refund claim is that as the goods were not exported under bond, therefore the provisions of rule 6(6)(v) of the Cenvat Credit Rules, 2004 are not applicable to the facts of this case. The learned consultant appeared on behalf of the appellant submits that it is not in dispute that they have paid duty on the inputs/input service which were gone in the manufacturing of export goods which were exempted product. It is further submitted that as goods were exempted, there is no question of execution of bond as there is no duty involved. He further submits that this issue came up before this Tribunal in Jobelle v. CCE : [2006] 203 ELT 627 (Trib. -Mum) and before the Hon 'ble High Court in CCE v. Drish Shoes Ltd. : [2010] 3 GSTR 259 (HP); [2010] 254 ELT 417 and Repro India Ltd. v. Union of India : [2009] 235 ELT 614 (Bom.) where the refund of the Cenvat credit was allowed of inputs/input service used in the exempted goods when exported under rule 5 and proviso to rule 6(1) is not attracted in view of the rule 6(6)(v) of the Cenvat Credit Rules, 2004. He further submits that the non -execution of bond when goods are exported is not in dispute, it is only a technical lapse. To support he relied on Paras Ship Breakers Ltd. : [2003] 159 ELT 734 (Trib. -Delhi). He also submits that refund under rule 5 can be allowed even when exempted goods are not exported under bond. To support this contention, he relied on Well Known Polyesters Ltd. : [2011] 267 ELT 221 (Trib. -Ahd). The said decision is accepted by the Department also.

(2.) ON the other hand, learned authorised representative strongly opposed the contention of the learned consultant who submits that it is not in dispute that the goods manufactured by the appellant are exempted goods. Therefore as per rule 6(1) of the Cenvat Credit Rules, 2004, they are not entitled to avail of credit on inputs/input service which were used in the manufacturing of exempted goods. He further submits that the provisions of rule 6(6)(v) of the Cenvat Credit Rules, 2004 are also not applicable. The fact is as admitted that the goods have been exported without executing any bond. As the appellant has not contested the eligibility of the inputs/input service proposed to be deny in the show -cause notice therefore they are not entitled for the same. He further submits that as per the amendment in Notification No. 42/2001 by virtue of Notification No. 24/2010, dated May 6, 2010 the appellant are not entitled to take credit itself. There is a separate procedure under rule 18 of the Central Excise Rules, 2002 to claim refund/rebate of the inputs when the manufacturing of exempted goods.

(3.) IN this case the appellant has procured inputs/input service on payment of duty which were gone in the manufacturing of exempted goods which were exported by the appellant. These facts are not in dispute. The intent of the legislation is not in dispute that the taxes are not to be exported. The same issue came up before Jobelle : [2006] 203 ELT 627 (Trib. -Mum) wherein this Tribunal held that sub -rule (5) makes an exception when exempted finished goods are either cleared to a free trade zone, SEZ, 100 per cent. EOU or are cleared for export under bond without payment of duty. If the goods are exported on payment of duty after taking credit of duty paid on the inputs and utilising the same, then the question of refund of input duty would not arise. But is clearly the Government's policy not to export the domestic duties, on the finished goods or on the inputs, to the international market. If refund of input duty credit is not allowed, the goods, will become costly in international market and less competitive.