2008 (10) TMI 108 - AT - Central Excise

Refund of unutilized credit on exports - appellant had opted to avail SSI exemption u/not. 8/03-C.E from 1-4-05 - surplus credit accumulated in March, 2005 and claimed in April, 2005 - As per Rule 11 of CCR, the credit relating to inputs in stock as on 1-4-05 alone had to lapse. This does not affect the assessee s entitlement to claim refund of Cenvat credit accumulated and available in balance as on 31-3-05 - assessee is entitled to claim refund of accumulated credit which it could not utilize

Summary

Issues:
- Rejection of refund claim by Commissioner (A) for an amount of Rs. 1,17,296/- filed by M/s. Jenntex Engineering Company
- Applicability of Rule 5 of Cenvat Credit Rules (CCR), 2004 for refund claim related to exported machinery
- Interpretation of Notification No. 11/02-C.E. (N.T.) regarding conditions for claiming refund of Cenvat credit
- Effect of opting for SSI exemption under Notification No. 8/03-C.E. on refund claim
- Comparison with legal precedents Samtel India Ltd. v. CCE, Jaipur and Chandra Cotton Fabrics v. CCE, Coimbatore
- Arguments regarding the lapse of credit balance and entitlement to claim refund

Analysis:

The appeal involved the rejection of a refund claim by the Commissioner (A) concerning an amount of Rs. 1,17,296/- filed by M/s. Jenntex Engineering Company for machinery exported to Nepal without duty payment under bond. The Commissioner (A) upheld the original authority's decision to reject the claim, citing that the appellants had opted for SSI exemption under Notification No. 8/03-C.E. from 1-4-05, leading to the lapse of the entire credit balance as per Rule 11 of CCR. The Commissioner (A) concluded that the appellants could have utilized the credit for paying duty on exported goods and claiming rebate, thus not meeting the criteria under Rule 5 of CCR.

The Ld. Consultant for the appellants argued that the refund claim was valid under Notification No. 11/02-C.E. (N.T.) as the exports occurred in March 2005, allowing the claim to be filed in April 2005. The Consultant relied on legal precedents, including the case of Samtel India Ltd. v. CCE, Jaipur, to support the appellants' eligibility for the refund claim based on vested rights and the inability to utilize the credit balance.

The Tribunal, after considering the submissions, found in favor of the appellants. It held that the appellants were entitled to claim the refund of the accumulated credit balance as of 31-3-05, despite the lapse of credit relating to inputs in stock under Rule 11 of CCR. The Tribunal emphasized that the appellants followed the prescribed procedure and had surplus credit accumulated from exports in March 2005, making them eligible for the refund claim under Rule 5 of CCR. The Tribunal rejected the argument that the appellants could have utilized the credit for duty payment, asserting the appellants' right to claim the refund for any unutilized credit. Thus, the appeal was allowed, and the appellants were deemed eligible for the refund amount of Rs. 1,17,296/-.