By TIOL News Service

BANGALORE, AUG 02, 2018: THESE are Revenue appeals filed against the order of CESTAT.

The respondent assessee is a manufacturer of Battery Operated Cars i.e., Electric vehicles falling [Ch87]. Prior to 1.3.2008, the manufacture of the said cars attracted central excise duty, but with effect from 1.3.2008, the same came to be exempted under a Notification. For the aforesaid two periods, the assessee claimed refund of the accumulated CENVAT credit in terms of Rule 5 of the CCR, 2004.

The adjudicating authority, however, rejected the said claim, but the Tribunal held in favour of the assessee by following the decisions in Repro India Ltd.- 2007-TIOL-795-HC-MUM-CX and Drish Shoes Ltd.- 2010-TIOL-350-HC-HP-CX . Kindly see - 2015-TIOL-2816-CESTAT-BANG.

As mentioned, Revenue is before the Karnataka High Court and submits that since the final product viz., Battery Operated Cars were exempted with effect from 1.3.2008, the assessee was not entitled to refund of the CENVAT credit in terms of the said rule 5. Support is also drawn from rule 11(3) of CCR.

The assessee submitted that in view of Rule 6(6)(v) of CCR, 2004, the provisions of sub-rules (1), (2), (3) & (4) of Rule 6 shall not be applicable to the case of the assessee.

Rule 6(6)(v) reads -

(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either-

(v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or

It is further submitted that merely by exemption, their character of being excisable goods is not lost and if excisable goods like Battery Operated Cars were removed for export on the basis of Bond and Letter of Undertaking in terms of Rule 19 of CER, 2002 and which the assessee did for the periods in question, the claim of refund under Rule 5 is not defeated and, therefore, Tribunal had correctly held in their favour. Moreover, the refund being claimed is of the CENVAT credit which got accumulated only after 01.03.2008 on inputs procured by assessee and used in the manufacture of Battery Operated Cars in question.

Furthermore, the Proviso to Rule 5 of CCR, 2004 for denying the refund of credit was also not applicable because the rebate referred therein relates to the rebate under Rule 18 and not under Rule 19 of CER, 2002; that no such rebate u/r 18 had been availed.

After extracting the decisions of the High Courts delivered in the cases of Repro India Ltd. - 2007-TIOL-795-HC-MUM-CX , Drish Shoes Ltd. - 2010-TIOL-350-HC-HP-CX and Same Duetz Fahr India (P) Ltd.- 2017-TIOL-1259-HC-MAD-CX , wherein it is held that a manufacturer, who exports the final products which are exempt from duty, can claim refund of CENVAT, the High Court observed that no contrary view had been brought to its notice and hence there was no reason to take a different view in the matter.

Concluding that there is no substantial question of law, the Revenue appeals were dismissed as being devoid of merits.

(See 2018-TIOL-1516-HC-KAR-CX)