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2013 (12) TMI 583 - AT - Central ExciseBar of Limitation Refund claim on accumulated credit - Notification No.11/2002 issued under Rule 5 of the Cenvat Credit Rules, 2002 Application to be filed in the prescribed form Proof of export and other records along with Documents to be submitted before the expiry of the period as per section 11B of central excise act 1944 Held that - The relevant date for the purpose of counting limitation period under Section 11 B is defined in Explanation B to Section 11 B - But it does not cover the claims for cash refund of accumulated credit under Rule 5 of the Cenvat Credit Rules, 2002 - Relying upon STI Ltd. V/s. CCE, Indore 2008 (10) TMI 246 - HIGH COURT OF MADHYA PRADESH AT INDORE - In respect of cash refund of accumulated credit filed under Rule 57F (4), the limitation period prescribed in Section 11 B is not applicable. Strict law of limitation provided under Section 11 B of the Central Excise Act would not apply to a claim for cash refund of accumulated credit made in terms of the notification issued under Rule 57F, as in such a case the requirement of filing of claim within the limitation period provided under Rule 11 B is procedural in nature rather than mandatory - any limitation for filing any claim, appeal etc., prescribed under any law, has two components - the period of limitation during which the claim, appeal etc. is to be filed and the date from which the limitation period is to be counted - If the date from which limitation period is to be counted is missing, it would amount to not prescribing any limitation period - the claim for the period from April, 2002 to June, 2002 is not hit by limitation. Admissibility of cash refund under Rule 5 of the Cenvat Credit Rules Held that - Rule 5 of Cenvat Credit Rule, 2002/2004 is different from Rule 3(4) - utilization of cenvat credit for payment of duty on final product, one to one co-relation between the inputs in respect of which canvat credit has been taken and the final product for payment of duty on which the credit is utilized, is not required - credit taken in respect of any input can be utilized for payment of duty on any final product - he credit in respect of inputs used in the manufacture of final products cleared for export under bond or LUT etc. can be utilized for payment of duty on clearances for home consumption of any final product including those made out of other inputs, as, as per the provisions of Rule 3(4), there is no restriction in this regard - only the credit which cannot be utilized for payment of duty on any final products cleared for home consumption would be eligible for cash refund under Rule 5. The cash refund of accumulated cenvat credit under Rule 5 is equivalent to input duty rebate under Rule 18 of Central Excise Rules, 2002 or excise/service tax duty drawback under Customs & Central Excise Duties Drawback Rules, 1975 of which only one benefit can be availed by a manufacture exporter at a time. Eligibility for Cenvat credit - Whether a manufacture can take cenvat credit in respect of inputs which have been used in the manufacture of finished goods exported out of India, but the finished goods are fully and unconditionally exempt from duty Relying upon COMMISSIONER OF CENTRAL EXCISE Versus DRISH SHOES LTD. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT - cenvat credit would be admissible in respect of inputs used in the manufacture of excisable goods which though fully exempt from duty, have been exported out of India as the term excisable goods in Rule 6(5)/ 6(6) of the Cenvat Credit Rules, 2002/2004 is wide enough to include both dutiable as well as exempted excisable goods and accordingly, if the credit accumulated due to export of such finished products, even if fully exempt from duty, cannot be utilized for payment of duty on domestic clearances, its cash refund would have to be allowed order set aside and matter remanded back to the original adjudicatory authority.
Issues Involved:
1. Applicability of Rule 5 of the Cenvat Credit Rules for cash refund of accumulated credit. 2. Limitation period for filing the refund claim. 3. Eligibility of cenvat credit on inputs used in manufacturing fully exempted goods exported out of India. 4. Verification of input-output correlation for refund eligibility. Detailed Analysis: 1. Applicability of Rule 5 of the Cenvat Credit Rules for Cash Refund of Accumulated Credit: The main contention revolves around whether Rule 5 of the Cenvat Credit Rules applies to cases where the exported goods are fully exempt from duty. The Revenue argued that Rule 5 is only applicable to dutiable goods, while the respondent contended that the rule allows for cash refund of cenvat credit for inputs used in the manufacture of final products cleared for export under bond, regardless of whether the final product is dutiable or exempt. The Tribunal noted that Rule 5 provides for cash refund of accumulated cenvat credit taken only in respect of those inputs used in the manufacture of final products cleared for export under bond or letter of undertaking. Thus, the principle of one-to-one correlation between input and finished product is essential for cash refund under Rule 5. 2. Limitation Period for Filing the Refund Claim: The Revenue contended that the refund claim for the period April 2002 to June 2002 was time-barred as it was filed after one year from the date of export. The Tribunal, however, observed that the notification under Rule 5 of the Cenvat Credit Rules does not specify the date from which the limitation period is to be counted. The Tribunal referred to previous judgments, including those from the Hon'ble Madhya Pradesh High Court and the Tribunal itself, which held that the limitation period prescribed under Section 11B is not applicable to cash refund claims of accumulated cenvat credit. Therefore, the claim for the period April 2002 to June 2002 was not considered time-barred. 3. Eligibility of Cenvat Credit on Inputs Used in Manufacturing Fully Exempted Goods Exported Out of India: The Tribunal referenced judgments from the Hon'ble Bombay High Court and the Hon'ble Himachal Pradesh High Court, which held that cenvat credit is admissible for inputs used in the manufacture of excisable goods, even if the finished goods are fully exempt from duty but are exported out of India. Therefore, if the accumulated credit due to export cannot be utilized for domestic clearance, its cash refund should be allowed. This interpretation supports the respondent's claim for cash refund of accumulated credit even if the final exported product is exempt from duty. 4. Verification of Input-Output Correlation for Refund Eligibility: The Revenue argued that the accumulated AED (T&TA) credit was primarily taken on duty-paid manmade yarn and fibers used in manufacturing manmade fabrics cleared for home consumption, while the exported goods were unprocessed cotton fabrics. The Tribunal emphasized the need for verification to ensure that the accumulated credit for which cash refund is sought pertains to inputs used in the manufacture of exported final products. The Tribunal remanded the case to the original adjudicating authority for de novo decision, instructing them to verify if the accumulated cenvat credit is indeed in respect of inputs used in the manufacture of final products exported under bond/LUT. Conclusion: The Tribunal set aside the impugned order and remanded the matter for a fresh decision, emphasizing the need for verification of input-output correlation and adherence to the principles laid out in Rule 5 of the Cenvat Credit Rules. The Tribunal also clarified that the refund claim for the period April 2002 to June 2002 is not time-barred.
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