A.

Rule-5 of CENVAT Credit Rules, 2004: Refund of CENVAT Credit on inputs or input services used in the manufacture or processing of goods exported, which is dutiable under The Central Excise Act, 1944. Conditions to be fulfilled in order to get refund of CENVAT Credit on Input and Input Service:
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Final Product or Intermediate Product shall be cleared for export under Bond or Letter of Undertaking (LOU). The input or input service shall be used in manufacture of the Final Product or Intermediate Product so exported. The CENVAT credit in respect of the input or input service so used is not possible to be utilized for any reasons towards payment of - Duty of excise on any final product cleared for home consumption or for export on payment of duty. - Service tax on output service. Exporter does not avail drawback under customers and Central Excise Duties Drawback Rules, 1995 or claims rebate of duty under the Cent ral Excise Rule, 2002.

Notes: i) Export under bond or LOU is made pursuant to Notification No.42/2001 -CE(N.T.) dated 20.06.2001. The required bond as per this notification is furnished in specified Form in a sum equal at least to the duty chargeable on the goods. The manufacturer -exporter may furnish a LOU in the specified Form in lieu of a bond. The bond or LOU is discharged only after the goods are duly e xported. Thus it can be said that export under Bond or LOU is made when the goods exported are dutiable. Vide Notification 24/2010-CE(N.T.) dated 26.05.2010, the export of excisable goods which are chargeable to nil rate of duty or wholly exempted are explicitly excluded from the purview of Notification No.42/2001 -CE(N.T.). Rule 5, is applicable for Export under Bond or LOU. thus from the provisions of Rule-5 read with Notification No.42/2001-CE(N.T.) dated 26.06.2001 and Notification No.24/2010 CE(N.T.) dated 26.05.2010 it can be concluded that refund under Rule -5 is available only when the goods exported are dutiable under Central Excise Act , 1944 and Rules framed there under.

ii) iii) iv)

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B. Refund of CENVAT Credit on inputs used in the manufacture or processing of goods exported, which is chargeable at nil rate or wholly exempted. In exercise of the power conferred by the Rule-18 of the Central Excise Rules, 2002, the Central Government, vide Notification No.21/2004 -CE(N.T.) dated 06.09.2004 directed that the rebate of whole of the duty paid on excisable goods used in the manufacture or processing of export goods shall be paid (i.e. shall be refunded) . Conditions to be fulfilled in order to get the rebate.
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Export shall be made to any country except Nepal and Bhutan. A declaration shall be filed with the AC or DC of the Central Excise describing - FG proposed to be manufactured / procured along with rate o f duty if any - Manufacturing / processing formula with reference to proportion of material used and quality thereof. - Tariff classification, rate of duty of materials used in manufacture or processing. - The AC or DC after verification of Input -Output Ratio on satisfaction that there is no likelihood of evasion of duty, may grant permission to the applicant for manufacture or processing and export of goods. Goods shall be exported on the application in Form No.ARE-2

Note:
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No rebate for CENVAT Credit on input service is available under this notification. Not applicable for Export of service. Unlike Rule-5 of CENVAT Credit Rule, 2004 no rebate is available if intermediate product is exported. This notification is also applicable for exportation of goods which is dutiable, provided export is made under rebate and not under Bond or LOU.

Clarificatory Notes for both the points

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Refund of CENVAT Credit is available on in the case of Export. Rule-5 of CENVAT Credit Rule, 2004 is for refund of CENVAT Credit subject to conditions laid down in this rule. Notification No.42/2001 -CE(N.T.) dated 26.06.201 is issued by the CBEC in exercise of the power conferred by Rule 19(3) of Central Excise Rule, 2001, whic h provided for procedures and conditions for Export under the Bond / LOU. This notification does not provide for any refund of CENVAT Credit, wherever Rule -5 is applicable when export is made pursuant to this notification. Notification No.21/2004-CE(N.T.) dated 06.09.2004 issued by the Central Government in exercise of the power conferred by Rule -18 of Central Excise Rule, 2002, which provided for - Procedures for export under rebate, and - Claim of rebate of duty paid on excisable goods used in the manufact ure or processing of goods exported under this notification. Notification No.42/2001-CE(N.T.) and Notification No.21/2004 -CE(N.T.) both provided for export without payment of excise duty. Application for removal of goods are made - In Form A.R.E 1 under Notification 42/2001-CE(N.T.) and - In Form A.R.E 2 under Notification 21/2004-CE(N.T.)

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