2011 (5) TMI 347 - AT - Central Excise

Waiver of pre-deposit - 100% EOU - CENVAT Credit - Rule 5 of the CENVAT Credit Rules, 2004 - Notification No.5/2006, the credit is admissible only in terms of those inputs or input services which are utilized in the goods exported during the relevant quarter or month. - Since this information is not provided by the respondent refund to be rejected - further excess amount sanctioned by the authority is without authority and base - matter remanded back for fresh consideration.

Summary

Issues:
1. Refund claim of duty paid on raw materials with CENVAT Credit.
2. Entitlement of refund in case of exports made under bond.
3. Power of Assistant Commissioner to re-credit the amount.
4. Examination of actual use of inputs in exported goods.
5. Excess amount of refund sanctioned.

Analysis:

Issue 1: Refund claim of duty paid on raw materials with CENVAT Credit
The appellant, a 100% EOU engaged in manufacturing and exporting Biscuits and Confectionary, filed a refund claim of duty paid on various raw materials with availed CENVAT Credit. The Assistant Commissioner sanctioned the refund claim, with a part amount to be taken as fresh credit in the Modvat account.

Issue 2: Entitlement of refund in case of exports made under bond
The Revenue filed an appeal against the Assistant Commissioner's order, arguing that since exports were made under bond and not under rebate claim, the appellant was not entitled to refund of MODVAT Credit. The Commissioner(Appeals) held that there is no provision denying the refund where exports occurred under bond, disagreeing with the Revenue's contention.

Issue 3: Power of Assistant Commissioner to re-credit the amount
The Revenue objected to the re-crediting of the amount by the Assistant Commissioner. The Commissioner(Appeals) noted that re-crediting the refund as fresh credit had no effect as it was already in the assessee's credit account, rendering the Revenue's objection unsustainable.

Issue 4: Examination of actual use of inputs in exported goods
The Commissioner(Appeals) highlighted that the Assistant Commissioner failed to examine whether the inputs were actually used in the manufacture of the exported goods. He emphasized the necessity of utilizing inputs and input services in goods meant for export for refund eligibility, which the respondent failed to provide information on. The Commissioner(Appeals) allowed the Revenue's appeal due to lack of evidence on input utilization.

Issue 5: Excess amount of refund sanctioned
The Commissioner(Appeals) observed that the adjudicating authority sanctioned an excess amount of refund beyond the claimed amount, which was unauthorized and baseless. This excess amount was mentioned in the relevant table, leading to the disposal of the appeals.

The Appellate Tribunal set aside the Commissioner(Appeals)'s order and remanded the matter to the original adjudicating authority for a fresh examination of the factual position regarding input utilization in exported goods. The stay petitions and appeals were disposed of accordingly.