2015 (1) TMI 1033 - AT - Central Excise

Refund of unutilized Cenvat/Modvat Credit- the appellants have filed a claim for refund of cenvat credit of ₹ 14,77,508/- on the ground that they have unutilized cenvat credit on inputs used in the manufacture of electric cars cleared for export under bond during the period from 13-1-2005 to 16-9-2005 under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 11/2002-C.E. (N.T.) dated 1-3-2002 as amended - whether the appellant is eligible for claim of refund of Cenvat credit of ₹ 14,77,508/- which was claimed on the ground that the credit on the inputs used in the manufacture of electric cars cleared for export under bond were not utilised. Held that - appellant had cleared the goods for export on payment of duty as per ARE-1 and filed rebate claims which were sanctioned. The accumulation of Cenvat credit has not arisen because of exports but because of difference in rates of duty on inputs and the final products. It is also undisputed that there cannot be any bond or letter of undertaking when the export was made on payment of duty - It can be seen from the Rule 5, it is very clear that refund cannot be allowed when the manufacturer or provider of output service avails of drawback or claimed rebate of duty under Central Excise Rules, 2002. In this case, the appellants had claimed rebate of duty and there is no contrary submission. Therefore the rejection of refund claim on this ground has to be sustained. - Decided against assessee.

Summary

Issues:
- Eligibility for claim of refund of Cenvat credit for inputs used in manufacturing electric cars cleared for export under bond.
- Whether a single Member Bench could decide on an issue involving more than &8377; 10 lakhs.
- Rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:

1. Eligibility for Claim of Refund of Cenvat Credit:
The appellant claimed a refund of Cenvat credit amounting to &8377; 14,77,508/- for inputs used in manufacturing electric cars cleared for export under bond. The initial appeal was rejected, leading the matter to the Hon'ble High Court of Karnataka. The High Court directed a reconsideration by a Bench of two Members within a specified timeframe. Despite multiple adjournments requested by the appellants, the Tribunal finally took up the matter for a decision. The appellant's contention was that the refund claim was rejected based on the premise that the final product must be exported under bond or letter of undertaking for claiming input Cenvat credit refund.

2. Rejection of Refund Claim under Rule 5 of Cenvat Credit Rules, 2004:
The appellant's refund claim was rejected primarily because they had claimed a rebate of Central Excise duty, which is not permissible under Rule 5 of the Cenvat Credit Rules. The rule specifies that a refund of Cenvat credit cannot be allowed if the manufacturer or provider of output service avails of drawback or claims rebate of duty under Central Excise Rules, 2002. The Tribunal noted that the accumulation of Cenvat credit was due to the variance in duty rates on inputs and final products, not because of exports. The Tribunal upheld the rejection of the refund claim based on the clear provisions of Rule 5.

3. Judicial Precedent and Decision Analysis:
The appellant relied on a precedent involving unutilized Cenvat credit of additional excise duty in the case of Indo Dane Textile Industries. However, the Tribunal distinguished this case by emphasizing that the refund could not be claimed on inputs when no additional excise duty was payable on the final products being exported. The Tribunal reiterated that since the appellants had claimed a rebate of duty and no additional excise duty was levied on the final products, the rejection of the refund claim was justified. The Tribunal concluded that the impugned order was in accordance with the law and upheld the rejection of the appeal.

In conclusion, the Tribunal sustained the rejection of the refund claim based on the provisions of Rule 5 of the Cenvat Credit Rules and the absence of additional excise duty on the final exported products. The Tribunal's decision was guided by legal provisions, judicial precedents, and the specific circumstances of the case, leading to the dismissal of the appeal.