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2015 (10) TMI 2353 - AT - Central ExciseRefund claim - CENVAT Credit - denial of Cenvat credit refund on the ground that supply of goods from one 100% EOU to another 100% EOU will not be considered as physical export - whether, the time limit prescribed in Section 11B of the Act would be applicable for refund of accumulated Cenvat credit in terms of Rule 5 of the Rules and, supply of goods between two EOUs, which is recognized as deemed export under the FTP, would be considered as physical export . for the purpose of getting the benefit of refund under Rule 5 of the said rules. Held that - In exercise of the powers conferred by Rule 5 of the Rules, the Central Government vide Notification No. 5/2006-C.E.(N.T.) dated 14.3.2006 prescribed the conditions/limitations for claiming refund of service tax by a manufacturer. In Appendix No. 6 of the said notification, it has been provided that refund application in Form A is to be filed with the jurisdictional Central Excise authorities before the expiry of period specified in Section 11B of the Central Excise Act, 1994 - The term relevant date has neither been defined in Rule 5 of the Rules nor in the notification issued there under. Further, the said term defined in Section 11B of the Act is not compatible with the situation envisaged in the aforesaid rule. Therefore, there was ambiguity in interpreting the importance/significance of the term relevant date in context with the said rule. The Hon ble High Court of Madras in the case of GTN Engineering (2011 (8) TMI 960 - MADRAS HIGH COURT), upon analysis of the provisions of Rule 5 of the Rules, Notification dated 14.03.2006 and Section 11B of the Act, have held that the date on which the export of the goods was made and for such goods, refund of Cenvat credit is claimed, should be construed as the relevant date for the purpose of Rule 5 of the Cenvat Credit Rules. Finding recorded in the impugned order that physical export is not to be equated with deemed export and thus, the appellant is not entitled for refund of Cenvat credit in terms of Rule 5 of Rules, in my considered opinion, is not legal and proper, in view of the judgment of Hon ble Gujarat High Court in the case of Shilpa Copper (2010 (2) TMI 711 - GUJARAT HIGH COURT ). - impugned order so far as to the rejection of refund claim on the ground of being time barred under Section 11B of the Act is sustained. The rejection of refund claim on the ground that supply of goods between two EOUs, is not eligible for refund being a deemed export is set aside - Decided partly in favour of assessee.
Issues Involved:
1. Applicability of the time limit prescribed in Section 11B of the Central Excise Act, 1944 for refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. 2. Whether the supply of goods between two 100% Export Oriented Units (EOUs), recognized as 'deemed export' under the Foreign Trade Policy (FTP), qualifies as 'physical export' for the purpose of refund under Rule 5 of the Cenvat Credit Rules, 2004. Detailed Analysis: 1. Applicability of the Time Limit Prescribed in Section 11B of the Central Excise Act, 1944: The appellant's refund application for the period from 01.07.2007 to 11.08.2007 was rejected on the grounds of being time-barred as per Section 11B of the Central Excise Act, 1944. The appellant argued that the refund claim was filed within one year from the end of the relevant quarter, in accordance with Notification No. 5/2006-Central Excise (N.T.) dated 14.03.2006. The appellant relied on the language used in the notification, specifically the word 'may', to justify filing the refund claim on a quarterly basis. Additionally, the appellant cited the Board Circular No. 112/6/2009-ST and judgments from the Karnataka High Court and Gujarat High Court to support their stance that Section 11B should not apply to refund claims under Rule 5 of the Cenvat Credit Rules. Contrarily, the respondent argued that Notification No. 5/2006-C.E.(N.T) adopts the limitation period under Section 11B of the Act, requiring the refund claim to be filed within one year from the date of deemed export. The respondent supported their argument with a judgment from the Madras High Court in the case of GTN Engineering (I) Ltd. Upon review, the Tribunal found that the term 'relevant date' is not defined in Rule 5 or the notification. The Tribunal referred to the Madras High Court's judgment in GTN Engineering, which held that the relevant date should be the date on which the goods were cleared for export. The Tribunal concluded that the appellant's claim was indeed time-barred under Section 11B, as the relevant date for filing the refund claim should be the date of export, and dismissed the appellant's argument based on the Karnataka High Court's judgment in mPortal India Wireless Solutions P. Ltd. 2. Whether 'Deemed Export' Qualifies as 'Physical Export' for Refund: The appellant's refund claims for the periods October-December 2007 and January-March 2008 were denied on the grounds that Rule 5 of the Cenvat Credit Rules applies only to 'physical exports', not 'deemed exports' to other EOUs. The appellant contended that deemed exports should be treated at par with physical exports for refund purposes under Rule 5. The appellant cited judgments from the Gujarat High Court in the cases of Shilpa Copper Wire Industries and NBM Industries to support this argument. The respondent maintained that physical export should not be equated with deemed export, referencing the Madras High Court's judgment in BAPL Industries Ltd. The Tribunal found that the judgment of the Gujarat High Court in Shilpa Copper Wire Industries, which held that deemed exports should be treated as physical exports for refund purposes under Rule 5, was more applicable. The Tribunal noted that in cases of conflicting judgments, the decision of a division bench (as in Shilpa Copper Wire Industries) prevails over that of a single judge (as in BAPL Industries). Conclusion: The Tribunal upheld the rejection of the refund claim amounting to Rs. 3,31,274/- on the grounds of being time-barred under Section 11B of the Central Excise Act, 1944. However, the Tribunal set aside the rejection of the refund claim amounting to Rs. 4,92,036/- on the grounds that deemed exports should be treated as physical exports for the purpose of refund under Rule 5 of the Cenvat Credit Rules, 2004. The appeals were disposed of accordingly.
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