The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ),granted a refund of reversed Cenvat credit, ruling that exported exempted goods qualified under Rule 6(6)(v) of the Cenvat Credit Rules,2004.
Macleods Pharmaceuticals Ltd, appellant-assessee, manufactured both exempted and dutiable products under the Central Excise Act, 1944. By availing Notification No. 4/06-CE dated March 1, 2006, goods cleared for home consumption were exempt from central excise duty. A common account was maintained for both categories, and Cenvat credit was availed on inputs and input services under Rule 6(3) of the Cenvat Credit Rules, 2004.
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For exempted products exported, the appellant-assessee reversed 5.15%/6.18% of their value by debiting the common Cenvat credit account as per Rule 6(3). Later, realizing that Rule 6(6)(v) allowed Cenvat credit for such exports, a refund claim of Rs. 17,56,3,185/- was filed on June 29, 2012, for the amount reversed on exports made from April 2011 to March 2012.
The adjudicating authority rejected the claim, stating that, under Notification No. 42/2001-CE (NT) dated June 26, 2001, the exempted products could not be exported under bond. Hence, it held that Rule 6(6)(v) did not apply.
The assessee appealed to the Commissioner (Appeals), who upheld the order-in-original. The assessee then appealed before the tribunal.
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The assessee’s counsel, stated that the tribunal had already ruled in a similar case that no amount was payable under Rule 6(3) due to Rule 6(6)(v) of the Cenvat Credit Rules, 2004. She argued that the issue was settled and the reversed amount should be refunded, citing relevant judgments.
In response,the revenue counsel argued that the assessee’s export under Notification No. 4/2006-CE was not covered by Notification No. 42/2001-CE (NT), so Rule 6(6)(v) didn’t apply. He said the Cenvat reversal under Rule 6(3) was correct, and no refund was due. He cited relevant judgments.
The two member bench comprising Ramesh Nair(Judicial Member) and C.L.Mahar(Technical Member) reviewed the submissions and records, finding that the assessee had reversed the amount under Rule 6(3) for exempted goods cleared for export and filed a refund claim. In a similar case, the tribunal had ruled that the assessee was not required to pay under Rule 6(3) for goods exempted under Notification No. 4/2006-CE, as the notification was conditional.
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The appellate tribunal concluded that since the appellant had paid an amount that was not due, they were entitled to a refund. It disagreed with the authorities’ argument that the reversal was not excise duty and therefore not eligible for refund under Section 11B. It also stated that the reversal was essentially a request for re-credit, which could be allowed if the reversal was not due.
The tribunal also distinguished the judgments cited by the revenue, stating that the issues in those cases were not relevant to the present case and found the impugned order unsustainable and set it aside.
In conclusion the appeal filed by the assessee was allowed.
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