2014 (2) TMI 351 - AT - Central Excise

Denial of refund claim - Availment of CENVAT Credit - Held that - accumulation of credit at a given time during the quarter with the export of the goods is not relevant under the notification but it is only the amount of credit taken during the entire quarter and lying unutilized at the end of the quarter. The respondent in their cross objections have submitted that they were not able to utilize the amount of Cenvat credit as the balance in the Cenvat credit account at the end of the quarter was very much higher than the amount of refund sanctioned. In fact the appellant revenue has contested the findings of the adjudicating authority based only for the month of April and May, 2009 and have not considered June, 2009 which is against the provision of the notification - if credit is admissible in a particular month, it will be admissible in preceding and succeeding month also and exporter can claim refund after nine months, which will obviously not relate to export of goods in same month - Decided against Revenue.

Summary

Issues:
1. Incorrect procedure followed by the revenue in filing the appeal under section 35E of the Act.
2. Discrepancy in the Cenvat credit balance and the amount of refund sanctioned.
3. Export clearance requirement under the Notification.
4. Refund claim filed on a proportionate basis of the credit availed.

Analysis:

Issue 1: Incorrect procedure under section 35E of the Act
The Tribunal noted that the revenue filed the appeal under section 35E of the Act, which was deemed incorrect for an erroneous refund granted under section 11B of the Act. The Tribunal emphasized that for recovery of such refunds, the revenue should resort to section 11A of the Act, as clarified by the CBEC. Consequently, the appeal filed by the revenue under section 35E was dismissed on legal grounds.

Issue 2: Discrepancy in Cenvat credit balance
The appellant revenue contested the Cenvat credit balance of the respondent, alleging it was insufficient compared to the refund sanctioned. However, the Tribunal held that the accumulation of credit at a specific time during the quarter with export of goods was not relevant under the notification. It was clarified that only the unutilized credit at the end of the quarter mattered. The Tribunal also highlighted that the revenue's contentions were unsustainable, as they did not consider the entire quarter's balance, as supported by a relevant judgment. Therefore, the appeal of the appellant revenue was rejected on merit.

Issue 3: Export clearance requirement
The revenue raised a concern about the export clearance requirement not being mentioned in the order sanctioning the refund. However, the Tribunal found this contention baseless as the export value exceeded the required percentage, as evidenced by the information provided by the appellant revenue itself. Consequently, the appeal on this ground was rejected.

Issue 4: Refund claim basis
The revenue argued that the refund claim was filed on a proportionate basis of the credit availed, which they deemed incorrect under the notification. The Tribunal, however, noted that the revenue failed to demonstrate why this claim was incorrect, especially when the conditions of the notification were met. As a result, the cross objections filed by the respondent were allowed.

In conclusion, the Tribunal upheld the order passed by the Commissioner (Appeals) based on detailed consideration of each ground raised by the revenue. The Tribunal found no infirmity in the order and rejected the appeal filed by the revenue.