2016 (7) TMI 469 - AT - Central Excise

Refund of cenvat credit of accumulated on account of duty of AED (T & TA) paid on inputs - since there was no AED (T & TA) on the finished goods the said credit got accumulated - Rule 5 of the Cenvat Credit Rules - Held that - As per rule 3 of the said rules, CENVAT Credit of AED (T&TA) can be taken even though the manner of utilization of such credit is restricted in terms of sub rule (7). Therefore, such unutilized accumulated credit of AED (T&TA) can be claimed as refund under rule 5 of the CENVAT Credit Rules, 2004 on export of goods. - Refund allowed.

Summary

Issues:
Refund claim under Rule 5 of the Cenvat Credit Rules, 2002 rejected based on the utilization of AED (T & TA) credit and its availability for export goods.

Analysis:
The case involved a refund claim filed by M/s Nahar Industrial Enterprises under Rule 5 of the Cenvat Credit Rules, 2002, related to the accumulation of AED (T & TA) credit due to the absence of such duty on finished goods. The claim was initially rejected by the adjudicating authority and the first appellate authority, leading the appellants to appeal before the Tribunal.

The appellant's counsel argued that the rejection was based on the restricted utilization of AED (T & TA) credit under Rule 3(6) (b) of the Cenvat Credit Rules, 2002, specifically concerning export goods. Reference was made to the CBEC Circular No. 267/11/2003-CX-8, dated 22.3.2007, to support the contention that the appellant's case was in line with legal precedents set by the Hon'ble High Court of Punjab & Haryana and the case of CCE, Thane vs DC Polyester Pvt. Ltd.

The Revenue's representative relied on the impugned order, which highlighted the rejection of the refund claim based on the grounds that the utilization of AED (T & TA) credit was restricted under Rule 3(6) (b) and not applicable for export goods. However, the Tribunal reviewed the submissions and referred to the CBEC Circular No. 267/11/2003-CX-8, which clarified that the refund of AED (T & TA) was permissible under Rule 5 of the Cenvat Credit Rules, 2002, even if the duty was not leviable on the finished product.

The Tribunal further emphasized that the credit of AED (T & TA) could be claimed as a refund under Rule 5 of the Cenvat Credit Rules, 2004, for export of goods, based on the clarification provided by the CBEC Circular. The Tribunal also cited a similar decision by the Hon'ble Punjab & Haryana High Court in a related case, setting aside the impugned order and allowing the appeal in favor of the appellant.