2007 (2) TMI 77 - AT - Central Excise

Refund Appellant demanded for refund was in respect of Cenvat credit of AED on the ground that they consumed raw material purchased for the manufacture of excisable goods exported on payment of duty Held refund is admissible

Issues Involved:
1. Refund claims under Rule 5 of the Cenvat Credit Rules, 2002.
2. Utilization of additional excise duty (AED) on inputs.
3. Requirement of bond or letter of undertaking for export.
4. Evidence of inputs used in the manufacture of exported goods.
5. Applicability of Rule 18 and Rule 19 of the Central Excise Rules, 2002.
6. Proviso to Rule 5 of the Cenvat Credit Rules, 2002.

Issue-wise Detailed Analysis:

1. Refund Claims under Rule 5 of the Cenvat Credit Rules, 2002:
The appeals were filed by the Revenue against the orders of the Commissioner (Appeals) allowing refund claims under Rule 5 of the Cenvat Credit Rules, 2002. The Commissioner (Appeals) had set aside the orders-in-original which denied the refund claims for unutilized credit of duty paid on inputs under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978.

2. Utilization of Additional Excise Duty (AED) on Inputs:
The respondents had paid additional excise duty on inputs used in the manufacture of final products which were exported. Since no additional excise duty was payable on the final products, the AED paid on inputs could not be utilized. The adjudicating authority rejected the refund claims on the grounds that Rule 5 allowed claims only for goods exported under bond and that the respondents did not provide evidence of inputs used in the exported goods.

3. Requirement of Bond or Letter of Undertaking for Export:
The Commissioner (Appeals) found that the adjudicating authority had overstepped the show cause notice by requiring a bond or letter of undertaking for refund claims under Rule 5. The Commissioner (Appeals) held that the refund was admissible even if the goods were exported on payment of duty, without the execution of a bond.

4. Evidence of Inputs Used in the Manufacture of Exported Goods:
The Commissioner (Appeals) determined that the respondents had provided sufficient evidence of inputs used in the manufacture of exported goods. This included maintaining prescribed records (RG 23A Pt. I) and submitting monthly RT. 12 returns. The respondents also produced a Chartered Accountant's certificate showing the export of the entire production.

5. Applicability of Rule 18 and Rule 19 of the Central Excise Rules, 2002:
Rule 18 pertains to the rebate of duty paid on excisable goods or materials used in their manufacture, while Rule 19 relates to export without payment of duty. The adjudicating authority's rejection based on Rule 19 was found inapplicable since the goods were exported on payment of duty. Therefore, the requirement of bond under Rule 19 did not apply.

6. Proviso to Rule 5 of the Cenvat Credit Rules, 2002:
The proviso to Rule 5 disallows refund if the manufacturer claims a rebate of duty under the Central Excise Rules, 2002. The Tribunal clarified that the term "duty" refers to the duty under Section 3 of the Central Excise Act, 1944. Since the respondents did not claim a rebate for the additional excise duty on inputs, they were entitled to a refund under Rule 5. The Tribunal emphasized that the refund claim for AED was not barred by the proviso to Rule 5 since no rebate of AED was claimed under Rule 18.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision, stating that the refund claims were justified based on the evidence provided and the correct interpretation of the rules. The appeals by the Revenue were dismissed, affirming the respondents' entitlement to refunds under Rule 5 of the Cenvat Credit Rules, 2002. The Tribunal concluded that the requirement for a bond was inapplicable, and the refund claim was not barred by the proviso to Rule 5.

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