Recently, in CCE v. Orion Batteries, the Bangalore CESTAT confirmed that the assessee is eligible for a rebate of Central Excise duty paid on inputs used in the manufacture of export goods, even in the case where customs duty component is claimed as a drawback.
Assessee, a manufacturer of batteries, availed the inputs used in the manufacture of final products. They moved a Refund application for refund of Cenvat Credit since they were not in a position to utilize the CENVAT credit in respect of inputs used in the manufacture of final products exported. However, the Department rejected the claim by holding that the claim was rejected on the ground that the claimant is ineligible for refund under Rule 5 of CCR, 2004 as they had claimed drawback under the Customs and Central Excise Duties under Drawback Rules, 1995.
The first appellate authority concluded the matter in favor of the assessee.
After hearing the arguments of the both sides, the bench clarified that where only Customs portion of duties is claimed as per the All Industry Rate of Drawback, Rule 57F(14), does not come in the way of admitting refund of unutilized credit of Central Excise / Countervailing duty paid on inputs used in products exported.
It was noted that the Board as per Circular No.83/2000 dated 16.10.2000, has clarified that even if the assessee has claimed drawback even then he is entitled to claim a refund under Rule 5 of CCR. Concurring with the order of the first appellate authority quashing the order rejecting the refund application of the assessee, the bench upheld the view that the assessee is eligible for a rebate of Central Excise duty paid on inputs used in the manufacture of export goods, even in case where customs duty component is claimed as a drawback.
Read the full text of the Order below.
