2011 (9) TMI 399 - AT - Central Excise

Refund claim in terms of Rule 5 of the Cenvat Credit Rules 2004 on duty paid on inputs used - appellants are engaged in the activity of building the bus bodies on the chassis supplied, and cleared the chassis on payment of appropriate duty and the appellants were availing credit on the duty paid on chassis and also purchasing duty paid inputs which are used in the fabrication of bodies. complete buses were cleared on payment of appropriate duty to DTA and some buses were also cleared under bond for export - Refund claim rejected on the ground that the appellants are not eligible to file refund claims under Rule 5 of the Cenvat Credit Rules 2004 as the appellants are neither manufacturer of the final products which were cleared for export under Bond nor they are manufacturers of the final product cleared for home consumption - Held that - it cannot be said that the appellants are not eligible to file refund claim matter is remanded to the Commissioner (Appeals) appeal allowed by way of remand.

Summary

Issues:
Refund claims under Rule 5 of the Cenvat Credit Rules, 2004 rejected by Commissioner (Appeal) for not meeting eligibility criteria.

Analysis:
The appellants, engaged in building bus bodies on chassis supplied by M/s Tata Motors Ltd, filed refund claims under Rule 5 of the Cenvat Credit Rules, 2004. The Commissioner (Appeal) rejected the claims, stating the appellants were not eligible as they were neither manufacturers of final products cleared for export nor for home consumption.

The appellants argued they were independent manufacturers of motor vehicles exported, citing Chapter Note 5 to Chapter 87 of the Central Excise Tariff. They referenced legal precedents like the Patna High Court decision and Tribunal rulings to support their claim as manufacturers entitled to unutilized credit under Rule 5.

The Revenue contended that the appellants received duty paid chassis, availed credit, and paid duty on complete buses. They also exported some buses under bond, claiming drawback on duty paid inputs. The Commissioner (Appeal) upheld the rejection, stating the appellants were not eligible under Rule 5.

The Tribunal found that the appellants' activities constituted manufacturing under Chapter Note 5, making them independent manufacturers. Legal precedents supported this view, emphasizing that body builders were manufacturers distinct from chassis suppliers. The Tribunal set aside the Commissioner (Appeal)'s findings, declaring the appellants as eligible manufacturers.

Rule 5 of the Cenvat Credit Rules, 2004 allows for refund of unutilized credit on inputs used in exported goods. The Tribunal held that appellants met the eligibility criteria for refund claims and remanded the matter to the Commissioner (Appeal) for further consideration.

In conclusion, the Tribunal allowed the appeals, setting aside the Commissioner (Appeal)'s decision and remanding the matter for a fresh decision on the refund claims based on the appellants' eligibility as independent manufacturers entitled to refund under Rule 5.