F.No.267/11/2003-CX-8, DT. 22/03/2007

Refund of unutilized credit of Additional duty of excise (T&TA) and its admissibility under Rule 5 of CENVAT Credit Rules by application of Board Circular No.701/17/2003-CX dated 12.3.2003.

Attention is invited to the Board"s Circular No. 701/17/2003-CX, dated 12.3.2003, wherein it was clarified that the refund of AED(GSI) is allowed under Rule 5 of the CENVAT Credit Rules, 2002, regardless of the fact that the said duty is not leviable on the finished product. The Board has received numerous references from the field formations as well as from the trade, seeking clarification on whether the refund of AED(T&TA) is allowed on similar lines for export of goods.

2. The issue has been examined. It is seen that in terms of the CENVAT Credit Rules, 2002, and the subsequent rules notified in 2004, CENVAT Credit of specified duty paid on inputs is admissible provided they are used in the manufacture of excisable goods other than exempted goods. Exempted goods are defined as goods which are exempted from the whole of duty of excise leviable thereon and include goods which are chargeable to Nil rate of duty. Consequently, the credit of duty paid on inputs is inadmissible only when the final product is exempted from duty of excise leviable thereon under section 3 of the Central Excise Act, 1944. If the final product is not chargeable to AED, it cannot be said that the final product is exempted from basic excise duty. Further, the condition relating to the restriction on the utilization of such credit lays down that the credit taken of AED (T&TA) can be utilized only for the payment of AED (T&TA). It is, therefore, observed that as per rule 3 of the said rules, CENVAT Credit of AED (T&TA) can be taken even though the manner of utilization of such credit is restricted in terms of sub rule (7). Therefore, such unutilized accumulated credit of AED (T&TA) can be claimed as refund under rule 5 of the CENVAT Credit Rules, 2004 on export of goods. Accordingly, it is clarified that clarification issued for the refund of AED (GSI) under rule 5 of the CENVAT Credit Rules, 2002 vide Board"s Circular No. 701/17/2003-CX, dated 12.03.2003, will be applicable to AED (T&TA) subject to the conditions and limitations as prescribed under the said rules.

3. The field formations may be instructed suitably.

4. The receipt of this letter may kindly be acknowledged.

Yours faithfully,

(Rahul Nangare)
Under Secretary (CX-6&8)

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