Per S.S. Kang : Heard both sides.

2. The appellants filed this appeal against the impugned order whereby refund claim filed by the appellants was rejected.

3. The appellants are engaged in the manufacture of stainless steel utensils and are availing benefit of CENVAT Credit in respect of inputs used in their final product. Stainless steel utensils were exempted from payment of Central Excise duty vide Notification No. 10/2003 dated 1.3.2003. The appellants made export of stainless steel utensils and filed a refund claim in respect of credit availed on inputs used in the manufacture of goods exported. A show cause notice dated 30.8.2004 was issued for denial of credit on the ground that as the exported goods were exempted from payment of duty and the appellants were not entitled for any credit and credit in their CENVAT Credit w.e.f. 1.3.2003 will lapse, hence, no refund. The appellants replied the show cause notice. The adjudicating authority rejected the refund claim. The appellants filed appeal against the adjudication order and the Commissioner (Appeals) in the impugned order held that the appellants had not followed the procedure, therefore, they are not entitled for refund.

4. Contention of the appellants is that as per proviso to Rule 5 of CENVAT Credit Rules the manufacturer is entitled for refund of Cenvat Credit availed on inputs used in exported goods. It is also submitted that Rule 6 of CENVAT Credit Rules, 2004 provides that the input credit is not available in respect of inputs used in the manufacture of exempted goods. However, this provision is not applicable for goods cleared for export. The appellants also submitted that in CBEC Manual (supplementary) it has been clarified that expression 'export goods' has been used and the same refers to excisable goods (dutiable or exempted) as well as excisable goods. It is also clarified that the benefit of input stage can be claimed on export of all finished goods, whether excisable or not. Contention of the appellants is that in view of the above rules they are entitled for refund in respect of duty paid on inputs used in exported goods.

5. The appellants also submitted that in reply to show cause notice they specifically produced copies of shipping bills and copies of ARE-1, packing list, Bill of lading, bank realization certificate and RG23A form. Contention is that all the documents showing export of the goods already produced before the lower authorities, therefore, finding of the Commissioner (Appeals) in the impugned order that the appellants have not produced these documents is factually incorrect and is not sustainable. The contention is also that in the show cause notice ground for rejection of refund claim was that as goods were exempted from payment of duty the appellants are not entitled for refund and on the ground that procedure is not followed.

6. Contention of Revenue is that the Commissioner (Appeals) in the impugned order held that proof of export have not been produced and the production of ARE-1 in reply to show cause notice is only an after thought. Therefore, refund was rightly denied. Contention is that onus is on the appellants to prove that the goods in respect of which refund claim has been filed were exported, and the appellant failed to do so, therefore, refund claim was rightly rejected.

7. I find that in this case stainless steel utensils were exempted from payment of duty w.e.f. 1.3.2003. The appellants made export of stainless steel utensils and claimed refund of duty paid on inputs used in exported goods. Show cause notice was issued for rejection of the refund claim on the ground that as the exported goods are exempted no credit is available and the procedure is not followed.

8. I find that Rule 5 of CENVAT Credit Rules, 2004 provides that manufacturer is entitled to utilize CENVAT Credit in respect of inputs used in exported goods for payment of duty on other goods, and in case he is unable to utilized the credit he is entitled for refun