2011 (10) TMI 196 - AT - Central Excise

Cenvat Credit - Assessee 100% EOU - Revenue denied refund claim as supplies to 100% EOUs are only deemed exports and provisions of Rule 5 are not applicable - Held - In view of CCE Vs. Shilpa Copper Wire Industries (2010 -TMI - 205858 - GUJARAT HIGH COURT) case decided in favour of assessee. Time limit stipulated under Section 11B of the Central Excise Act is not applicable in the case of refund claim under Rule 5 of the Cenvat Credit Rules, 2004

Summary

Issues:
1. Applicability of Rule 5 of the Cenvat Credit Rules, 2004 to supplies made to 100% Export Oriented Units (EOUs).
2. Time limitation under Section 11B for refund claims.
3. Interpretation of benefits under para 8.3 of the Exim Policy 2004-2009 in relation to cash refund of accumulated cenvat credit.

Analysis:

Issue 1: Applicability of Rule 5 of the Cenvat Credit Rules, 2004 to supplies made to 100% EOUs:
The dispute revolved around whether Rule 5 of the Cenvat Credit Rules, 2004 is applicable to supplies made to 100% EOUs without payment of duty. The appellant argued that several judgments, including those of the Hon'ble Gujarat High Court and Tribunal, supported their position that supplies to 100% EOUs should be treated as exports eligible for cash refund under Rule 5. The Tribunal agreed with this interpretation, citing various precedents that clarified that supplies to 100% EOUs are akin to exports and therefore qualify for the refund of accumulated cenvat credit. The Tribunal highlighted that the provisions of Rule 5 extend to supplies made to 100% EOUs, emphasizing that the denial of cash refund for such supplies was incorrect based on established legal principles.

Issue 2: Time limitation under Section 11B for refund claims:
The appellant raised a concern regarding the time limitation under Section 11B for refund claims, specifically for a claim from a certain period. The Tribunal referenced previous cases, such as Global Energy Food Indus. Vs. CCE, Ahmedabad, and a judgment of the Gujarat High Court, which clarified that the time limit prescribed under Section 11B of the Central Excise Act does not apply to refund claims under Rule 5 of the Cenvat Credit Rules, 2004. Consequently, the Tribunal ruled in favor of the appellant on this issue as well, affirming that the time limitation under Section 11B did not restrict the refund claim under Rule 5.

Issue 3: Interpretation of benefits under para 8.3 of the Exim Policy 2004-2009:
The Departmental Representative contended that the benefits outlined in para 8.3 of the Exim Policy 2004-2009 did not include cash refund of accumulated cenvat credit for deemed exports. However, the Tribunal disagreed with this interpretation, asserting that the provisions of the Exim Policy should not be superimposed onto the Cenvat Credit Rules. The Tribunal emphasized that Rule 5 of the Cenvat Credit Rules explicitly allows for cash refund of accumulated cenvat credit for final products cleared for export or intermediate products cleared for export. This interpretation was supported by a series of Tribunal and High Court judgments, indicating that the benefits under the Exim Policy did not preclude the cash refund provision under Rule 5. Consequently, the Tribunal concluded that the denial of cash refund based on the Exim Policy provisions was incorrect.

In conclusion, the Tribunal set aside the impugned order and allowed the appeals, affirming the applicability of Rule 5 to supplies to 100% EOUs, rejecting the time limitation under Section 11B for refund claims, and dismissing the interpretation of Exim Policy benefits as a bar to cash refund under Rule 5.