2015 (7) TMI 580 - AT - Central Excise

Denial of refund claim - refund of unutilized credit - CENVAT Credit of Basic Excise Duty and AED (GSI) - Held that - Refund claims under Rule 57F (13) of Central Excise Rules, 1944 read with notification no. 85/87 pertain to the period prior to 1/4/2000 and these refund claims are of the accumulated AED (GSI) credit in respect of the inputs which had been used in the manufacture of tyres exported under bond without payment of duty. There is no dispute that though during that period, there was no AED (GSI) on the tyres , the appellant in view of the Board s Circular dated 12/3/2003 would be eligible for cash refund of the AED (GSI) credit. In view of the amendment of CENVAT Credit Rules, 2002 in March, 2003 they had utilized the entire amount of AED (GSI) Credit of Rs . 8,71,12,812/-accrued prior to 1/4/2000 for payment of Basic Excise Duty and Special Excise Duty on tyres and subsequently when the utilization of AED (GSI) credit for payment of Basic Excise Duty and Special Excise Duty was restricted by section 88 of the Finance Act, 2004, to that AED (GSI) Credit only which had accrued w.e.f . 1/4/2000, they out of the total pre-1/4/2000 credit of Rs . 8,71,12,812/-utilized earlier, paid back an amount of Rs . 8,49,74,300/-and thus, the amount of Rs . 21,38,512/-still remains utilized for payment of Basic Excise Duty and Special Excise Duty. While the notification no. 85/97 CE(NT) provides that the claim for cash refund under Rule 57F (13) is to be filed within the limitation period prescribed under section 11B and section 11B prescribes the limitation period which is to be counted from the relevant date as defined in that section, neither this notification nor section 11B gives the definition of the relevant date for the purpose of cash refund under Rule 57F (13). While cash refund under Rule 57F (13) becomes admissible only after export of the goods having been made under bond and when the assessee cannot utilize the CENVAT Credit attributable to the inputs used in the manufacture of the goods cleared for export under bond, for payment of duty on the clearances for home consumption, the Rule does not prescribe as to how only the manufacture exporter is to want utilization of the accumulate credit for payment of duty on the clearances for home consumption. Therefore, it may not be correct to treat the date of clearance of the goods for export as the relevant date . - refund claims have to be treated as not hit by limitation. In view of the above discussion, the impugned order is set aside and the appeal is allowed. The appellant would be eligible for cash refund under section 57F (13) only if in terms of the Tribunal s final order dated 14//2015 they reverse the AED (GSI) Credit of Rs . 21,38,512/-in their CENVAT Credit Account - Decided in favour of assessee.

Summary

Issues:
1. Refund of AED (GSI) credit accrued prior to 1/4/2000 for inputs used in the manufacture of exported tires under bond without duty payment.
2. Utilization of AED (GSI) credit for payment of Basic Excise Duty and Special Excise Duty.
3. Time limitation for filing refund claims under Rule 57F (13) of Central Excise Rules, 1944.

Analysis:

Issue 1: Refund of AED (GSI) credit accrued prior to 1/4/2000:
The Appellant, a tire manufacturer, accumulated AED (GSI) credit for nylon tire cord fabrics used in manufacturing tires exported under bond without duty payment. Initially, the Appellant sought a refund of Rs. 18,90,389/- under Rule 57F (13) for the AED (GSI) credit. The authorities rejected the refund claim on the basis that the credit had already been utilized for domestic clearances. However, the Appellant argued that the AED (GSI) credit was eligible for cash refund as per a Board circular, despite no AED (GSI) on the final product. The Tribunal's final order clarified that AED (GSI) credit accrued before 1/4/2000 could not be used for Basic Excise Duty and Special Excise Duty. The Appellant agreed to reverse the remaining credit and was deemed eligible for the cash refund of Rs. 18,90,389/-.

Issue 2: Utilization of AED (GSI) credit for payment of Duty:
The Appellant had utilized the AED (GSI) credit accrued before 1/4/2000 for Basic Excise Duty and Special Excise Duty. However, a subsequent amendment restricted such utilization to credits accrued after 1/4/2000. The Appellant reversed a portion of the credit and sought a cash refund for the remaining amount. The Tribunal held that the Appellant could claim a refund for the AED (GSI) credit utilized improperly for payment of duty, in line with the amended rules.

Issue 3: Time Limitation for Refund Claims:
The authorities contended that the refund claim was time-barred, citing a judgment regarding the relevant date for such claims. However, the Appellant argued that the relevant date for cash refunds under Rule 57F (13) was not defined and referred to a High Court judgment stating that strict limitation laws did not apply to such claims. The Tribunal agreed that the claims were not time-barred and allowed the appeal, directing the Appellant to reverse the AED (GSI) credit to be eligible for the cash refund.

In conclusion, the Tribunal set aside the impugned order, allowing the Appellant's appeal for the cash refund under Rule 57F (13) upon reversing the AED (GSI) credit in their CENVAT Credit Account.