Order date – 15 September 2022

Facts – 

• The appellant, M/s. Baba Super Minerals Pvt. Ltd., is manufacturer of non excisable goods i.e. Quartz powder & Grits & Marble powder. The said Products fall under Tariff Item No. 2506 and 2517 which prescribes nil import tariff rate.
• The appellant vide an application dated 10.12.2015 had applied claiming the refund of Cenvat credit of an amount of Rs.12,14,299/- in terms of Rule 5 of Cenvat Credit Rules, 2004.
• Show Cause Notice dated 31.12.2015 was issued rejecting the claim on the ground that since the goods were exported without payment of duty but not under the bond or the letter of undertaking, that appellant was denied to claim the benefit of Rule 6(1) of Cenvat Credit Rules, 2004. Violation of Rule 9(2) and Rule 11(2) of Central Excise Rules was also alleged.
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether denial of refund to the appellant for want of bond or letter of undertaking is justifiable?

Order – 

• The Tribunal observed that according to Rule 3 of Cenvat Credit of the duty of excise as specified in sub-rule (1)(i) to (xi), the manufacturer is allowed to take the Cenvat credit only when the manufactured product attracts some duty of excise/some kind of cess/some other kind of tax. Admittedly, the appellant’s final product i.e. quartz was subject to nil rate of duty.
• Also under Rule 6 of CCR, 2004, it was observed that Cenvat credit shall not be allowed to a manufacturer of final product on such quantity of input as is used in or in relation to the manufacture of exempted goods.
• Though Rule 6 (6) (v) creates an exemption inter alia in respect of excisable goods removed without payment of duty for export but only for those exports as were made under bond in terms of Central Excise Rules, 2002. But it was already established that the export in the present case has not been made under bond.
• Thus, the Court held that the appellant is not entitled to claim the Cenvat credit of duty paid on imports used in manufacture of the product to which nil rate of duty was applicable.
• In such situation if some credit has been availed Rule 14 (Transfer of CENVAT credit of additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act) should have first been applied by the department. However in the present matter, it was not apparent as to whether rule 14 has been complied with by the department prior rejecting the impugned refund.
• Accordingly, the Tribunal remanded back the matter to original Adjudicating Authority to check for the compliance of Rule 14 CCR, 2004 only and then to freshly adjudicate the impugned refund. 
• Appeal allowed by way of remand.