The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of excise duty is allowable on the raw materials used for the manufacture of finished goods.
Kadri Wovens, the appellant assessee was a 100% Export Oriented Unit (EOU) engaged in the manufacture of Blankets, Throws, Sheets, etc and imported capital goods and raw materials/consumables without payment of duty under Notification No.52/2003-Customs for the manufacture of finished products.
The assessee appealed against the order passed by the Commissioner (Appeals) for dropping the refund claim of Rs.55,64,436/- by way of cash.
S. Durairaj, the counsel for the assessee contended that the CENVAT credit availed and utilized of duty paid on semi-finished goods and finished goods at the time of de-bonding are valid and the amount claimed by the claimant assessee was eligible to be refunded.
M. Ambe, the counsel for the department contended that the assessee was not eligible for the CENVAT credit which was availed the refund claim filed by the assessee was not valid and the rejection of the refund was as per the law and liable to be sustained.
The Bench observed that the assessee was eligible for the credit availed on the raw materials used for the manufacture of finished goods, which were subsequently exported and the refund claim filed by the assessee was as per the law and liable to be allowed.
The two-member bench comprising (Judicial) Sulekha Beevi and Vasa Seshagiri Rao (Technical) held that the assessee was eligible for the refund claim while allowing the appeal filed by the assessee.
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