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Circular No. 701/17/2003-CX
12th March, 2003.

F.No.267/11/2003-CX.8
Government of India
Ministry of Finance and Company Affairs
Department of Revenue
Central Board of Excise & Customs

Subject : Central Excise- Refund of unutilized Credit of Additional Duty of Excise (Goods of Special Importance) in terms of rule 5 of CENVAT Credit Rules, 2002 – regarding.

            I am directed to say that representations have been received expressing doubt whether unutilized CENVAT Credit of Additional Duty of Excise levied under Additional Excise Duty (Goods of Special Importance) [AED(GSI)] Act, 1957 paid on the fabrics used for the manufacture and export of ready made garments can be refunded in terms of rule 5 of CENVAT Credit Rules, 2002( hereinafter referred as to the said rules). A view has been expressed that refund of such credit can not be granted as in the first place, credit of AED (GSI) paid on fabrics is not admissible in view of restriction clause in rule 3 of the said rules on utilization of such credit and the fact that AED(GSI) is not leviable on finished product i.e. ready made garments.

2.         Board has examined the matter. It is observed that as per rule 3 of the said rules, CENVAT credit of AED(GSI) paid on fabrics may be taken even though the manner of utilization of such credit is restricted in terms of sub rule (6). Incidentally this restriction is also removed vide Notification No.13/2003-CE (NT) dated the 1st March, 2003. Since the admissibility of credit of such duty cannot be disputed in view of specific provision of the said rule 3, the refund of unutilized credit of such duty is admissible under rule 5 of the said rules.

3.         Accordingly, it is clarified that the refund of AED(GSI) shall be allowed under rule 5 of CENVAT Credit Rules, 2002 regardless of the fact that the said duty is not leviable on the finished product. Pending cases if any, may be decided accordingly.

4.         Trade and field formations may please be informed suitably.

5.         Receipt of the same may please be acknowledged.

6.         Hindi version will follow.

Vijay Mohan Jain
Under Secretary to the Government of India