2011 (8) TMI 980 - AT - Central Excise

Refund of unutilised cenvat credit - Held that - Following decision of assessee s own previous case in 2010 (2) TMI 538 - CESTAT AHMEDABAD - proviso itself makes it clear that the restriction is applicable only in respect of Cenvat credit claimed as refund and is not applicable to terminal excise duty paid as drawback by under Foreign Trade Policy - EOUs who receive duty paid goods can avail input credit for the duty paid on such goods and utilize the credit for payment of duty on DTA clearances and if for some reasons the credit cannot be utilized the same can be claimed as refund under Rule 5 of CENVAT Credit Rules. In addition as per para 8.3 of Foreign Trade Policy the supplies to EOUs are treated as Deemed Export . Thus the manufacturers have the additional facility to claim the benefit of refund of Terminal Excise Duty and deemed Export drawback on such supplies to EOUs. - Decided against Revenue.

Summary

Issues:
Stay of operation of impugned order passed by Commissioner (Appeals), disposal of appeal, refund arising out of unutilized CENVAT Credit for a 100% EOU, applicability of proviso on Cenvat credit claimed as refund, entitlement of EOUs to avail CENVAT Credit Scheme, rejection of Stay Petition and appeal.

Analysis:
The Appellate Tribunal CESTAT AHMEDABAD, comprising Mr. M.V. Ravindran and Dr. P. Babu, JJ., considered a Stay Petition filed by the Revenue to stay the operation of an impugned order passed by the Commissioner (Appeals). Upon review and hearing both parties, the Tribunal noted that the appeal could be disposed of directly as the issue had already been decided in the appellant's own case reported in 2010 (254) ELT 467 (Tri-Ahmd). The issue at hand concerned a refund arising from unutilized CENVAT Credit by a 100% Export Oriented Unit (EOU), with both lower authorities ruling in favor of the assessee.

The Tribunal observed that in a previous case involving a similar issue with the same respondent, the Revenue's appeal was rejected by the Tribunal. The Tribunal emphasized that the restriction on CENVAT credit claimed as a refund did not apply to terminal excise duty paid as drawback under the Foreign Trade Policy. Referring to a CBEC Circular, the Tribunal highlighted that EOUs were entitled to avail the CENVAT Credit Scheme, allowing them to claim a refund for unutilized credit on duty paid goods under Rule 5 of CENVAT Credit Rules. Additionally, supplies to EOUs were treated as Deemed Exports, enabling manufacturers to claim a refund of Terminal Excise Duty and deemed Export drawback on such supplies.

Based on the above analysis, the Tribunal held that the impugned order was correct, legal, and free from any infirmity. Consequently, the Stay Petition and the appeal were both rejected. The judgment was dictated and pronounced in court, affirming the decision of the Tribunal in favor of the respondent.