2008 (12) TMI 607 - AT - Central Excise

Refund of accumulated CENVAT credit - the refund stands denied on technical and procedural grounds - Rule 5 of Cenvat Credit Rules, 2004

Summary

Issues:
Refund of accumulated Cenvat credit in respect of inputs used in exported products under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
The case involved appeals related to the refund of accumulated Cenvat credit for inputs used in exported products. The appellant, engaged in manufacturing stationery items, claimed the refund under Rule 5 of Cenvat Credit Rules, 2004. The Deputy Commissioner rejected the claim stating that since the exported goods were exempted, credit benefits could not be allowed. Moreover, the claim was disallowed on the grounds of potential double benefit due to importing some inputs duty-free and incorrect filing procedures. The Commissioner (Appeals) agreed that the appellant was entitled to the refund but required evidence of inability to use the credit for home consumption duty payment. The Commissioner also highlighted procedural errors in filing and doubted the raw material usage consistency for export products.

The Tribunal acknowledged the legal agreement between the Commissioner (Appeals) and the appellant on the main issue but noted the denial of refund on technical and procedural grounds. The Tribunal opined that procedural discrepancies in filing formats and timelines should not hinder the appellant's entitlement to claim if the benefits are otherwise valid. However, the Tribunal concurred with the Commissioner (Appeals) regarding the inconsistency in raw material usage for export products. The Tribunal referred to the impugned order's findings on the mismatch between the raw materials claimed for refund and those used in the exported goods. The Superintendent's report supported the admissibility of the refund but lacked evidence of a direct link between the inputs and the final exported products. Consequently, the Tribunal remanded the matter to the original adjudicating authority to establish the nexus between the inputs and the exported goods for a fair determination.

In conclusion, the Tribunal upheld the entitlement to claim the refund but emphasized the necessity of establishing the connection between the inputs claimed for credit and the final products exported. The matter was remanded for further verification to ensure the proper utilization of the Cenvat credit in compliance with Rule 5 of the Cenvat Credit Rules, 2004.