2017 (2) TMI 1420 - AT - Service Tax

Refund of CENVAT Credit - refund rejected by the authorities on the sole ground that e-BRCs i.e. Electronic Bank Reconciliation Certificate do not stand produced by them - Rule 5 of the Cenvat Credit Rules - HELD THAT - The basic criteria for refund of credit is that the exporter had realized value of goods or services so exported by them for which purpose production of BRC is required. The requirement of filing e-BRC instead of manual BRC is only a procedural requirement and non-production of the same would not result in denial of benefit if otherwise available to the assessee. The impugned order denying refund claim on the said sole ground is not justified - matter is remanded to the original adjudicating authority for examining the manual BRC issued by the banks and to re-decide the refund - Appeal allowed by way of remand.

Summary

Issues involved:
Refund of credit under Rule 5 of Cenvat Credit Rules based on production of e-BRCs, rejection of refund claim due to non-production of e-BRCs, introduction of e-BRC requirement by DGFT, banks issuing manual BRCs due to software limitations, procedural vs. substantial requirement for refund eligibility.

Analysis:

The judgment addresses the issue of refund of credit under Rule 5 of the Cenvat Credit Rules concerning the production of e-BRCs. The appellant, an exporter, filed for a refund which was rejected by authorities solely due to the non-production of e-BRCs. The appellant argued that the requirement of e-BRC was introduced by DGFT through a notice in 2012, and some banks were still issuing manual BRCs due to software limitations. The appellant presented manual BRCs and a letter from the bank indicating their inability to issue e-BRCs. The Tribunal acknowledged that the basic criteria for refund is the realization of export value, for which BRC production is necessary. It emphasized that the shift from manual to e-BRC was a procedural requirement, and non-production of e-BRC should not lead to denial of benefits if other conditions are met.

The Tribunal found the order denying the refund claim solely on the grounds of non-production of e-BRCs unjustified. Consequently, the Tribunal set aside the order and remanded the matter to the original adjudicating authority for re-examination of the manual BRCs issued by the banks and to decide the refund accordingly. The appeal was disposed of with instructions for the adjudicating authority to complete the process within three months due to the involvement of the appellant's refunds.

In conclusion, the judgment clarifies the distinction between procedural and substantial requirements for refund eligibility under the Cenvat Credit Rules. It highlights that the non-production of e-BRCs, when manual BRCs are provided due to genuine constraints, should not automatically lead to the denial of refund benefits. The decision ensures a fair assessment of refund claims based on the fulfillment of essential criteria rather than strict procedural compliance.