2017 (1) TMI 1409 - AT - Central Excise

Clearance made by 1005 EOU to 100% EOU - Refund of accumulated CENVAT credit - Rule 5 of CCR - whether the clearances made by the appellant to 100% EOU can be considered as exports for the purpose of Rule 5 refund? - Held that - reliance was placed in the case of COMMR. OF CENTRAL EXCISE Versus SHILPA COPPER WIRE INDUSTRIES 2010 (2) TMI 711 - GUJARAT HIGH COURT , where it was held that the 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 CCR, 2004 - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Refund claims under Rule 5 of CENVAT Credit Rules for clearances made to 100% EOUs.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Hyderabad involved the consideration of refund claims under Rule 5 of CENVAT Credit Rules for clearances made to 100% EOUs. The appellants, engaged in the manufacture of chemical solvents, were unable to utilize the CENVAT credit accumulated due to clearances to 100% EOUs. The original authority sanctioned the refund, but the Department appealed before the Commissioner (Appeals) who rejected the refund. Subsequently, the appellants filed appeals against the rejection of refund claims for different periods. The appellant contended that the clearances made to 100% EOU should be considered as exports for the purpose of Rule 5 refund, citing relevant case laws to support their argument.

The appellant's counsel argued that the clearances made to 100% EOU should be treated as exports, relying on the decision in the case of CCE Vs. Shilpa Copper Wire Industries and a recent Tribunal decision in the case of M/s. Uniworth Textiles Ltd., Vs. CCE, Raipur. On the other hand, the respondent reiterated the findings in the impugned order rejecting the refund. After hearing both sides, the Tribunal considered whether the clearances to 100% EOU could be deemed as exports for the purpose of Rule 5 refund. The Tribunal relied on the decisions cited by the appellant and held that the rejection of the refund was unjustified. Consequently, the impugned orders rejecting the refund were set aside, and it was held that the appellant was eligible for the refund. The appeals were allowed with consequential reliefs, if any, in favor of the appellant.