Per Archana Wadhwa :

Both the appeals are arising out of the same impugned order of the Commissioner (Appeals) and issue involved is identical. As such, both the appeals are being disposed off by a common order. I have heard Shri K.V. Sahasrabudhe, Ld. Consultant appearing for the appellant and Shri N.V.B. Nair, Ld. DR for the revenue.

2. The appellant is engaged in the processing of textile fabrics and had cleared MMF fabrics to 100% EOU under bond. They filed refund claims of the modvat credit availed by them and lying unutilized for Rs. 1,52,265/- and Rs. 87,585/- for the month of January 2002 and February 2002 in terms of provisions of Rule 5 of Cenvat Credit Rules, 2001, read with Section 11B of Central Excise Act. The said refund claims were allowed by the Assistant Commissioner by observing that the appellant had given an undertaking that no rebate claims in respect of the deemed exports had been filed by them. He, further, observed that in terms of Notification No. 53/2001-CE (NT) dated 29.06.2001, refund is to be allowed only where the manufacturer is not in a position to utilize the credit of duty against goods exported under Bond during the month. Inasmuch as, the assessee has very less clearances and duty paid exports, he was unable to utilize the credit of deemed modvat credit availed on the inputs used in clearances to 100% EOU, he allowed the refund claim.

3. Being aggrieved with the order of the adjudicating authority, Department challenged the same before the Commissioner (Appeals) on the ground that refund of credit availed on inputs was permissible only in case of exports and in as much clearance to 100% EOU was deemed exports, the two cannot be equated and modvat credit would not be available as refund. For the above proposition, they referred to definition of "export" as appearing in Section 2 (18) of the Customs Act, 1962 and to the definition of "deemed exports" made in para 8.1 of Export Import Policy 2002-2007. Inasmuch as the supplies made to 100% EOU are considered "deemed export" and not `export', the benefit available to export cannot be extended to `deemed export'.

4. The above contention of the revenue was accepted by the Commissioner (Appeals) and by referring to the Tribunal's decision in the case of M/s. Blue Star Ltd. Vs. Commissioner of Central Excise, Mumbai, reported in 2003 (57) RLT 201 (CEGAT-Mum.)=2003 (155) ELT 322 (Tri.-Mum.), held the order of the lower authority as legally not proper and correct. Accordingly, appeal was allowed. Hence the present appeals.

5. The appellants have mainly contended that reliance by the Commissioner (Appeals) to the definition of "exports" and "deemed export" under the Customs Act is not justified and inasmuch as there is no definition of export under the Excise Act, deemed export should have been considered as export. They have also contended that provisions of Rule 5 are applicable to the inputs, which are used, in the final products cleared for export under bond. Inasmuch as the goods in question were admittedly cleared under bond "for export", the refund was correctly sanctioned by the Deputy Commissioner.

6. After hearing the Ld. DR, I find that there is no definition of export under the Excise Act. As such, going by the definition of export as given in Customs Act or as understood in the common parlance, clearance to 100% EOU cannot be treated as export. The Tribunal in the case of Blue Star Ltd. Vs. Commissioner of Central Excise, reported in 2003 (57) RLT 201 (CEGAT-Mum.)=2003 (155) ELT 322 (T) has held that the goods sent to 100% EOU are one step away from completion of export and in itself cannot conclude export. The ratio of the above decision is fully applicable to the facts of the present case. By a fiction of law, goods cleared to 100% EOU have been equated with exports, i.e., they are deemed export but such fiction of law is created only for a specific purpose and cannot be equated with exports in a blanket manner. Inasmuch as Rule 5 uses e