2015 (2) TMI 747 - AT - Central Excise

Refund under rule 5 of Cenvat credit rules,2004 - Goods cleared for export under bond/LUT - The only dispute is as to whether the duty payable on the scrap cleared for home consumption during the quarter to which the refund claim pertains and also whether the amount recovered from the customers as duty on the sale of waste and scrap during the period from January 2003 to 30th June 2004 can be deducted from the refund. Held that - In our view for these deductions there is absolutely no authority. The appellant would be eligible for cash refund of the accumulated Cenvat credit taken in respect of inputs which have been used in the manufacture of goods which has been exported under bond/LUT and in this case, cash refund can be disallowed only to the extent the cenvated inputs are contained in the scrap cleared for home consumption on payment of duty. Matter remanded back for re-determining the quantum of cash refund. Decided partly in favour of appellant.

Summary

Issues:
Claim for refund under Rule 5 of the Cenvat Credit Rules, 2004 - Deduction of duty on waste generated and recovered from sale of scrap - Dismissal of appeal by Commissioner (Appeals) - Legality of deduction from refund claim.

Analysis:
The appellant, a manufacturer of CR Steel Strips and HNT Steel Strips, exported finished products under bond without duty payment while availing Cenvat credit on inputs. A refund claim of Rs. 64,50,989/- was filed for the quarter ending 30th September 2004. The Assistant Commissioner sanctioned a refund of Rs. 54,62,559/- but deducted duty paid on waste generated, duty recovered on sale of waste and scrap, and interest, resulting in a reduced refund amount. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

The appellant argued that as per Rule 5 of the Cenvat Credit Rules, cash refund of Cenvat credit for exported finished products is permissible under specific conditions. They contended that deductions made by the authorities lacked legal basis, citing a Tribunal's precedent. The Department defended the decision of the Commissioner (Appeals).

Upon review, the Tribunal found that the conditions for cash refund under Rule 5 were met in this case. However, the dispute centered on the deduction of duty on scrap cleared for home consumption and the amount recovered as duty on sale of scrap. The Tribunal held that there was no legal basis for these deductions. The appellant was entitled to a refund of accumulated Cenvat credit for inputs used in exported goods, except for the portion contained in scrap cleared for home consumption. Consequently, the impugned order was set aside, and the matter was remanded to the Assistant Commissioner for recalculating the refund amount due to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, directing a reassessment of the refund under Rule 5 of the Cenvat Credit Rules, 2004, and ordering any excess amount to be paid to them.