2016 (4) TMI 1066 - HC - Central Excise

Refund of Cenvat credit - Rule 5 of CCR Rules, 2004 - Rejected on the ground that respondents are not manufacturers - Inputs used in the manufacture of final products which were exported - Certificate of Chartered Accountant certifies the same - Respondents submitted that they were not making any claim in respect of credit availed on input services but only on credit availed on inputs and the average export clearance is less then 50% of the total clearance during the subject period - Held that - there was no merit in the above Appeal. The appellant, did not disputed the factual correctness of the said contention. Therefore, there is no perversity in the findings of fact arrived at by the authorities below and there is no violation of Rule 5 ibid. - Decided against the revenue

Summary

Issues:
Challenge to order rejecting refund claims under Central Excise Act, 1944.

Analysis:
The appellant challenged the order rejecting refund claims under Section 35(G) of the Central Excise Act, 1944. The respondents had filed twenty quarterly refund claims for an aggregate amount of &8377; 28,89,30,788/- for exports made during a specific period. The Central Excise Department issued show cause notices proposing to reject the refund claims on various grounds, including the respondents availing Duty Drawback and goods being cleared under CT-1 certificate. The Assistant Commissioner rejected the refund claims, some on grounds not raised in the show cause notices. The Commissioner (Appeals) set aside objections and remanded for quantification. The Assistant Commissioner rejected claims without referring to the Commissioner's orders. The CESTAT allowed the respondents' appeal, remanding the matter for verification. The Commissioner (Appeals) held the refund claims eligible under Rule 5. The Assistant Commissioner sanctioned a refund but rejected a portion as time-barred. The Revenue filed an appeal against this order on new grounds. The Commissioner (Appeals) rejected the appeal, stating pre-audit verification favored the respondents. The Revenue then appealed to the CESTAT, which rejected the appeal.

The Tribunal noted the appellant's contention that conditions under Rule 5 were not examined. However, the Tribunal found the respondents' claims under Rule 5 were correctly allowed, as accumulated credit on inputs for export goods was refundable if not utilized. The Assistant Commissioner's order stated that claims were verified and a portion was time-barred. The Range Office confirmed that the accumulated credit pertained to inputs for export goods. The Tribunal upheld the sanction of the refund and rejected the Revenue's appeal. The contention that the respondents were not manufacturers was rejected, as the refund was claimed for inputs used in exported final products, certified by a chartered accountant. The respondents clarified they only claimed credit on inputs, not input services. The average export clearance being less than 50% during the subject period further supported the respondents' position. The Appeal was rejected as there was no violation of Rule 5 of the Cenvat Credit Rules of 2004, and no perversity in the findings of fact by the authorities below.