2015 (10) TMI 136 - AT - Central Excise

Denial of exemption claim - refund of terminal excise duty - invalidated EPCG licences - Whether the respondent would be eligible for the exemption under Notification No. 56/02-CE - Held that - The customer. M/s Reliance Telecom Infrastructure Limited had not availed Cenvat credit in terms of Rule 12 of the Cenvat Credit Rules, 2004 and in this regard had given a certificate that they will not claim refund of TED from DGFT. Based on this certificate, the respondent claimed refund of the excise duty from. DGFT. It is seen that as per the policy of DGFT, refund of terminal excise duty is not admissible if the goods supplied are exempted goods and in this regard DGFT has initiated proceedings against the respondent and has imposed penalty of ₹ 11 crores for wrongly claiming the refund availment of excise duty. In our view the matter of claiming terminal excise duty refund from DGFT in respect of the goods supplied by the respondent is a matter between them and the DGFT and on this ground it would not be correct to deny the benefit of Notification No. 56/02-CE to the Respondent for which the necessary condition stand satisfied by them. - Since, the respondent had availed the exemption under Notification No. 56/02-CE in respect of the goods supplied by them to M/s Reliance Telecom Infrastructure Limited against invalidated EPCG licences, the respondent should not have claimed refund of terminal excise duty from DGFT and since they have claimed the refund, DGFT has imposed penalty on them. But this cannot be the ground for denial of the benefit of the exemption notification to the respondent. - Decided against Revenue.

Issues:
1. Denial of exemption under Notification No. 56/02-CE due to availing TED refund from DGFT.
2. Validity of proceedings initiated by the Department for recovery of allegedly wrongly availed exemption.
3. Review of refund claims under Notification No. 56/02-CE.
4. Appeal against the order of the Commissioner (Appeals) by the Revenue.

Issue 1: Denial of exemption under Notification No. 56/02-CE due to availing TED refund from DGFT

The respondent, a manufacturer of DG sets, availed exemption under Notification No. 56/02-CE for supplying DG sets to M/s Reliance Telecom Infrastructure Limited against invalidated EPCG licenses. They also claimed a refund of terminal excise duty (TED) from DGFT for these supplies. The Department initiated proceedings to deny the exemption, arguing that availing TED refund and exemption simultaneously amounted to double benefit. The Commissioner upheld the exemption, but the Revenue appealed. The Tribunal held that the matter of TED refund was between the respondent and DGFT, and the availed exemption should not be denied solely based on the TED refund claim.

Issue 2: Validity of proceedings initiated for recovery of allegedly wrongly availed exemption

The Department issued a show cause notice to recover the allegedly wrongly availed exemption amount. The Commissioner dropped the proceedings, but the Revenue appealed. The Tribunal noted that the respondent met the conditions for exemption under Notification No. 56/02-CE. The Tribunal dismissed the Revenue's appeal, emphasizing that the TED refund issue did not justify denying the exemption benefit to the respondent.

Issue 3: Review of refund claims under Notification No. 56/02-CE

The Jurisdictional Deputy Commissioner sanctioned refund claims under Notification No. 56/02-CE, which were reviewed by the Commissioner. The Commissioner (Appeals) dismissed the Revenue's appeals against these orders. The Revenue filed an appeal against the Commissioner (Appeals)' decision. The Tribunal upheld the Commissioner (Appeals)' order, stating that the respondent's eligibility for exemption was not impacted by the TED refund issue.

Issue 4: Appeal against the order of the Commissioner (Appeals) by the Revenue

The Revenue appealed against the Commissioner (Appeals)' order upholding the respondent's exemption under Notification No. 56/02-CE. The Tribunal considered arguments from both sides. The Revenue contended that claiming TED refund and exemption simultaneously was unjustified. The respondent argued that the TED refund issue did not affect their eligibility for exemption. The Tribunal sided with the respondent, emphasizing that the TED refund matter was separate and should not impact the exemption status. The appeals were dismissed.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's reasoning in reaching its decision.

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