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2011 (2) TMI 584 - AT - Central ExciseCash refund - accumulated Cenvat credit - Rule 5 of the Cenvat Credit Rules, 2004 - Notification No. 43/2002-Excise, dated 19-9-2004 and 93/04-Cus., dated 10-9-2004 - There is no provision in this Rule that the cash refund of accumulated Cenvat credit would not be available if the exports have been made under Advance Licence - It is in this background that the Tribunal held that when the appellant have taken the benefit of duty exemption under Notification No. 203/92-Cus., after reversing the input duty credit, they cannot avail the cash refund of the Modvat credit, which had already been reversed. In the present case, neither the condition of non-availment of Cenvat credit in respect of the goods exported is there in the notification No. 43/2002-Cus. or 93/2004-Cus. nor the Cenvat credit availed by them has been reversed - Decided in favour of the assessee
Issues Involved:
1. Entitlement to cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. 2. Allegation of double benefit by availing Cenvat credit and Advance Licence Scheme simultaneously. 3. Interpretation of conditions under Notification No. 43/2002-Cus. and 93/04-Cus. Issue-wise Detailed Analysis: 1. Entitlement to Cash Refund of Accumulated Cenvat Credit: The respondent manufacturers spun yarn of polyester, acrylic, and viscose staple fiber, availing Cenvat credit on inputs and capital goods. They exported the manufactured yarn under bond without paying duty, under the Advance Licence Scheme, and sought cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The jurisdictional Deputy Commissioner rejected their refund claims, arguing that sanctioning these refunds would result in double benefits. However, the CCE (Appeals) allowed the appeals, leading to the Revenue filing the present appeals. 2. Allegation of Double Benefit: The Revenue argued that allowing encashment of Cenvat credit under Rule 5, along with the benefit of the Advance Licence Scheme, which permits duty-free import of replenishment material, would amount to double benefit. They cited judgments in Videocon International Ltd. v. Commissioner of Customs and CCE, Bhopal v. HEG Ltd., and referred to Board's Circular No. 1/95-Cus. The respondent countered that Rule 5 of the Cenvat Credit Rules, 2004 does not prohibit cash refund of Cenvat credit accumulated due to exports under bond, even if done under the Advance Licence Scheme. They referenced Tribunal decisions in Commissioner of Central Excise, Jaipur-II v. Bhilwara Spinners Ltd. and Ispat Industries Ltd. v. CCE, Nagpur, arguing that cash refund of accumulated Cenvat credit does not amount to double benefit. 3. Interpretation of Conditions under Notification No. 43/2002-Cus. and 93/04-Cus: The Revenue contended that exports under the Advance Licence Scheme, as per Notification No. 43/2002-Cus. and 93/04-Cus., should not avail the facility under Rule 18 or Rule 19(2) of the Central Excise Rules, 2002. They argued that Rule 18 (rebate of duty paid on inputs) and Rule 5 (cash refund of accumulated Cenvat credit) are equivalent, and thus, both benefits cannot be availed together. The Tribunal, however, found that Rule 5 only restricts cash refund if the exports are made under a drawback claim or if input duty rebate under Rule 18 is claimed. Since there is no explicit restriction in Rule 5 against availing cash refund for exports under the Advance Licence Scheme, the Tribunal held that the benefit of cash refund under Rule 5 cannot be denied. Conclusion: The Tribunal concluded that the conditions of Notification No. 43/2002-Cus. and 93/04-Cus. do not explicitly restrict cash refund of accumulated Cenvat credit for exports under the Advance Licence Scheme. The Tribunal emphasized that any condition not explicitly stated in Rule 5 cannot be read into it. Therefore, the Revenue's appeals were dismissed, and the impugned order allowing the respondent's refund claims was upheld. The Tribunal also noted that if the Department believes the conditions of the customs notifications were breached, the appropriate action would be to deny the duty exemption under those notifications, not the cash refund under Rule 5.
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