2015 (11) TMI 700 - AT - Central Excise

Denial of refund claim - refund of unutilized Cenvat Credit - deemed export - whether the refund under Rule 5 and Notification issued thereunder is admissible in case of the deemed export i.e. supplies made to 100% EOU by the appellant from their DTA unit - Held that - In the case of NBM Industries(2011 (9) TMI 360 - GUJARAT HIGH COURT) the Hon ble Gujarat High Court following their own judgment in case of Shilpa Copper wire Industries(2010 (2) TMI 711 - GUJARAT HIGH COURT ) held that deemed export can be equated with physical export and accordingly the refund under Rule 5 cannot be denied on the ground that supply under deemed export and not under physical export. In the case of Shilpa Copper wire Industries(supra) the issue involved was refund under Rule 5 in a case where goods were supplied from one 100% EOU to another 100% EOU. The Hon ble Court held that the Tribunal is justified and has not committed any substantial error of law in dismissing the appeal of the Revenue and confirming the order of the learned Commissioner(Appeals) holding that the clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat Credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rules 2004. - appellant is entitled for cash refund of accumulated Cenvat amount in terms of Rule 5 of Cenvat Credit Rules 2004. - Decided in favour of assessee.

Summary

Issues: Whether refund under Rule 5 and related notification is admissible for deemed exports to 100% EOU.

Analysis:
1. Issue of Refund Eligibility: The appellant claimed a refund of accumulated Cenvat Credit under Rule 5 for deemed exports to 100% EOU. The appellant argued that Rule 5 does not exclude deemed exports and cited relevant judgments supporting their claim. On the other hand, the Revenue contended that the notification requires physical export and specific documents for refund eligibility, implying deemed exports are not covered. The Tribunal analyzed Rule 5 and the related notification, noting the absence of exclusion for deemed exports. The Tribunal considered various judgments, including those by the Hon'ble Gujarat High Court and the Supreme Court, which equated deemed exports to physical exports for refund eligibility under Rule 5.

2. Judicial Precedents: The Tribunal referenced judgments like NBM Industries, Shilpa Copper wire Industries, and Anita Synthetics Pvt. Ltd., which treated deemed exports to 100% EOU as physical exports for refund purposes under Rule 5. These judgments established that clearances to 100% EOU should be considered as physical exports, entitling the appellant to a refund of unutilized Cenvat Credit. The Tribunal distinguished the Revenue's reliance on cases like BAPL Industries Ltd. and Virlon Textile Mills Ltd., emphasizing the binding legal position favoring refund eligibility for deemed exports.

3. Decision: Considering the settled legal position and precedents, the Tribunal concluded that the appellant is entitled to a cash refund of accumulated Cenvat amount under Rule 5. The impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal's decision aligned with the interpretation that deemed exports to 100% EOU should be treated as physical exports for refund purposes under Rule 5.