2016 (2) TMI 992 - AT - Central Excise

Refund claim - Clandestine removal - supply of goods to 100% EOU - N/N. 22/2003-CE dated 31.03.2003 - Held that - I find that the issue is settled in favor of the appellant by Hon ble Gujarat High Court in the case of NBM Industries 2011 (9) TMI 360 - GUJARAT HIGH COURT where it was held that once Development Commissioner giving permission to the appellant a 100% EOU to sell goods in DTA up to a specified value Revenue cannot go beyond the permission and dispute it holding that for fixing the limit only physical exports and not deemed exports should have been taken into account. Thus clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule 2004 - Accordingly I hold the Commissioner (Appeals) have erred in rejecting the refund claim. Thus the appeal is allowed and the impugned order is set aside. The appellant to be granted refund by the Adjudicating Authority with 30 days with interest as per Rules on receipt of this order - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Appeal against Order-in-Appeal No. 229-230-CE/APPL/NOIDA/2009 dated 28/08/2009.
- Refund claim filed for duty paid on inputs used in manufacturing goods supplied to 100% EOU.
- Rejection of refund claims by Ld. Commissioner (Appeals), Central Excise, Noida.
- Interpretation of export under Central Excise Act & Customs Act.
- Application of Notification No. 22/03-CE for exemption of Central Excise Duty.
- Precedent set by Hon'ble Gujarat High Court regarding refund of Cenvat credit.

Analysis:
The appellant, engaged in manufacturing auto components, filed two appeals against the Order-in-Appeal dated 28/08/2009. The appeals were related to the rejection of refund claims amounting to significant sums for duty paid on inputs used in manufacturing goods supplied to a 100% EOU during the period of July 2006 to September 2006. The Ld. Commissioner (Appeals) rejected the claims, citing that the goods were cleared to the EOU without payment of duty, and the subsequent export was deemed export, lacking proof of actual export as per the Central Excise Act and Customs Act.

The appellant argued that Notification No. 22/03-CE provided an exemption for Central Excise Duty when goods were brought for export into the EOU, subject to specific conditions. The appellant contended that the form CT-3, a prescribed certificate for removal of excisable goods under bond, was utilized in compliance with the notification. Additionally, the appellant relied on a ruling by the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise & Customs v/s NBM Industries, where it was held that refund of Cenvat credit was available for inputs used in goods cleared to a 100% EOU, even in cases of deemed export.

After considering the arguments, the Member (Judicial) found in favor of the appellant, citing the precedent set by the Hon'ble Gujarat High Court. It was held that the Commissioner (Appeals) erred in rejecting the refund claim, and the impugned order was set aside. The appellant was directed to be granted the refund by the Adjudicating Authority within 30 days, with interest as per rules upon receipt of the order.