2012 (12) TMI 97 - AT - Central Excise

Refund export - adjudicating authority after going through refund claims and all the relevant documents has sanctioned the refund claims to the appellants holding that the assessee is eligible for refund to the extent of ratio of export turnover to the total turnover - appeals filed by the Revenue were decided by the Commissioner (Appeals) vide impugned Order-in-Appeal holding that the excess refund sanctioned to the assessee are liable to be rejected and recovered from them Held that - Commissioner (Appeals) has given finding only in those cases where excess refund was granted to the assessee on the basis of proportionate credit and he has not considered the cases where less refund were sanctioned to the assessee, though the appeals were filed by the Revenue in respect of all 16 Orders-in-Original - matter remanded back to the original adjudicating authority to examine and decide the refund claims on the basis of actual use of inputs gone into the manufacture of final product exported under bond or under letter of undertaking month-wise

Summary

Issues:
16 appeals filed by M/s. Lupin Ltd. against Order-in-Appeal passed by Commissioner, eligibility for refund under Rule 5 of Cenvat Credit Rules, 2004, verification of inputs used in the manufacture of final products for export, proportionate CENVAT Credit calculation, excess and less refund sanctioned, appeals filed by Revenue challenging refund orders, cross-objections filed by appellants, interpretation of Rule 5 and Notification No. 5/2006-CE.

Analysis:

Issue 1: 16 appeals filed by M/s. Lupin Ltd. against Order-in-Appeal
The case involved 16 appeals filed by M/s. Lupin Ltd. against the Order-in-Appeal passed by the Commissioner. The appeals pertained to refund claims under Rule 5 of the Cenvat Credit Rules, 2004 for the period August, 08 to July, 09 for Lupin - Goa Unit and Lupin - Mandideep Unit.

Issue 2: Eligibility for refund under Rule 5 of Cenvat Credit Rules, 2004
M/s. Lupin Ltd. filed refund claims for excisable goods under Rule 5 of the Cenvat Credit Rules, 2004. The adjudicating authority initially sanctioned the refunds based on the ratio of export turnover to total turnover. However, the Revenue challenged this decision, arguing that the refunds should only be for inputs used in the manufacture of products exported under bond or letter of undertaking.

Issue 3: Verification of inputs used in the manufacture of final products for export
The Revenue contended that the adjudicating authority failed to verify whether the refund claims were for inputs actually used in the manufacture of final products subsequently exported. They also raised concerns about the quantity of input used and reasons for the accumulation of CENVAT Credit, especially for a 100% EOU.

Issue 4: Proportionate CENVAT Credit calculation
The Revenue argued that the formula used for calculating proportionate CENVAT Credit was applicable only for unutilized input service credit, not for accumulated CENVAT Credit of inputs. They also questioned why the manufacturer couldn't utilize the input credit.

Issue 5: Excess and less refund sanctioned
The Commissioner (Appeals) held that excess refunds granted to the assessee should be rejected and recovered, while the cases with less refund were not addressed in the appeals. The appellants claimed they were eligible for additional refund due to revised working and running credit balance adjustments.

Issue 6: Appeals filed by Revenue challenging refund orders
The Revenue filed appeals against the proportionate refund basis used by the adjudicating authority. The Commissioner (Appeals) decided in favor of the Revenue, leading to the appellants appealing against the impugned orders.

Issue 7: Interpretation of Rule 5 and Notification No. 5/2006-CE
The Tribunal found that the refunds should only be allowed for inputs used in the manufacture of products exported under bond or letter of undertaking, as per Rule 5 and Notification No. 5/2006-CE. The original authority's approach of granting refunds based on export turnover ratio was deemed improper and contrary to the rules.

Conclusion:
The Tribunal remanded the matter back to the original adjudicating authority to re-examine and decide the refund claims based on the actual use of inputs in the manufacture of final products exported under bond or letter of undertaking, month-wise, providing the appellants with a reasonable opportunity to be heard. The appeals were allowed by way of remand, emphasizing adherence to the specific conditions outlined in Rule 5 and the related notifications for refund eligibility.