2011 (3) TMI 1185 - AT - Central Excise

Refund claim in terms of Rule 5 of CENVAT Credit Rules, 2004 r.w. Notification No. 5/2006 (N.T.) dated 14.3.2006 - Denial of refund on the ground that un-utilised credit can be utilised only for payment of duty on the final products on which the exemption under Notification No. 39/2001-CE dated 31.07.2001 has been availed - Held that - It was clarified vide Board s letter from F.No. 209/11/2005-CX.6 dated 3.10.2007 that the manufacturer can avail rebate of duty paid on inputs used in the manufacture of goods exported in terms of Notification 21/2004-CE (NT) dated 6.9.2004. Rule 5 of the CENVAT Credit Rules, 2004 provides for refund of accumulated CENVAT credit in respect of export goods cleared under bond in case the manufacturer is unable to utilise the same for payment of duty in respect of domestic clearances. As input rebate is permissible to these units, refund under Rule 5 of the CENVAT Credit Rules, 2004 would also be admissible, subject to fulfillment of condition prescribed in the Rule and Notification issued under the said Rule. This aspect is to be examined by the lower appellate authority, appeal is allowed by way of remand

Summary

Issues:
Refund claim denial under Rule 5 of CENVAT Credit Rules, 2004 based on unutilized credit utilization for duty payment on exempted final products.

Analysis:
The appellant, engaged in manufacturing and exporting M.S. Steel Pipes, filed a refund claim of Rs.5,67,52,097/- under Rule 5 of CENVAT Credit Rules, 2004. The department rejected the claim, stating the unutilized credit can only be used for duty payment on exempted final products. The adjudicating authority and Commissioner (Appeals) upheld the denial. The appellant argued that the Commissioner (Appeals) did not consider the Board's clarification, and for a subsequent period, their refund claim was approved following the clarification. The Board's clarification stated that refund under Rule 5 is admissible for accumulated CENVAT credit against exports, subject to conditions. The Tribunal held that the lower appellate authority should review the case considering the clarification and grant an appropriate order within 30 days, allowing the appeal by remand.

This judgment clarifies the eligibility of exporters for refund claims under Rule 5 of CENVAT Credit Rules, 2004. It emphasizes that unutilized credits can be refunded against exports, as per the Board's clarification, provided conditions are met. The Tribunal directed the lower appellate authority to re-examine the case, considering the clarification, and make a decision within a specified timeframe. This decision ensures adherence to legal provisions and procedural fairness in refund claim adjudications, promoting consistency and compliance in such matters.