2012 (10) TMI 645 - AT - Central Excise

Cenvat credit export cash refund of accumulated Cenvat Credit Held that - It is also not the allegation that the goods in respect of which refund has been claimed were not exported - refund rejected on the ground that the goods were not exported during September 2008 but were exported during October 2008 - ground for rejecting the refund is prima facie without any basis and contrary to the provisions of law as the goods in respect of which refund has been claimed have been exported waiver of pre-deposit allowed

Summary

Issues:
1. Admissibility of cash refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 for export clearances under ARE-1s during July 2008-September 2008.
2. Rejection of refund claim due to goods being exported in October 2008 instead of September 2008.
3. Shortage in the Cenvat Credit account of the appellant for November 2008.
4. Issuance of show cause notice for recovery of the refund amount and interest.
5. Adjudication of the show cause notice by the Assistant Commissioner, leading to the rejection of the refund claim.
6. Upholding of the Assistant Commissioner's order by the C.C.E. (Appeals).
7. Filing of appeal against the order of C.C.E. (Appeals) along with a stay application.

Analysis:

1. The appellant sought a cash refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 for export clearances under ARE-1s during July 2008-September 2008. The Department objected to the refund claim for 18 consignments cleared for export in September 2008, as the goods were exported in October 2008, alleging a violation of Explanation (B)(a)(i) of Section 11B of the Central Excise Act, 1944. However, the Tribunal noted that the refund claim was filed within one year from the date of shipment, and there was no requirement in the rules that goods must be exported within the same quarter as the claim pertains. The Tribunal found the objection baseless and contrary to the law, as the goods were indeed exported.

2. An amount discrepancy of Rs. 1,25,105/- was observed in the Cenvat Credit account for November 2008. Despite having a higher balance in the Cenvat Credit account than the refund claimed, a show cause notice was issued for recovery of the discrepancy amount along with interest. The Assistant Commissioner rejected the refund claim of Rs. 28,10,352/- and confirmed the demand of Rs. 22,25,328/-, leading to an appeal to the C.C.E. (Appeals) and subsequently to the Tribunal.

3. The Tribunal analyzed the conditions for refund under Rule 5 of Cenvat Credit Rules, 2004 and Notification No. 5/06-C.E. (N.T.), dated 14-3-06. It emphasized that the relevant date for export refunds is determined by Explanation B to Section 11B, which was not violated in this case. The Tribunal found the appellant had a strong prima facie case, and the requirement of pre-deposit was waived to prevent undue hardship. The stay application was allowed, and recovery was stayed pending the appeal's disposal.