2016 (11) TMI 1287 - AT - Central Excise

100% EOU - CENVAT credit - Central Excise Duty paid on some inputs and of Service Tax paid on input services, which they use for payment of duty in respect of their DTA clearances - Rule 5 of the Cenvat Credit Rules, 2004 readwith Notification No. 5/2006-CE (NT) dated 14/3/06 - Held that - I find that the point of dispute in this case stand decided in the favour of the appellant by the Tribunal s judgment in the case of CCE, Hyderabad Vs. Ravi Foods Ltd. 2011 (3) TMI 1108 - CESTAT, BANGALORE , where it was held that Provisions of Rule 5 of the CCR read with Notification No.5/2006 as amended makes it very clear that there is no requirement for co-relation between the inputs used and the goods exported - If that be so, the question of restricting the refund claim to the extent of input services used / consumed during the month / quarter seems to be mis-placed - At the same time, find that as per the condition No.5 of the Notification No.5/2006, the calculation which has been worked out by the Commissioner(Appeals) in the impugned order, if is correct, then the refund is liable to be sanctioned to the respondent/assessee. Moreover, I also find that the point regarding one to one co-relationship is not the point stemming from the order-in-original, which was passed by the Assistant Commissioner. It is only at the review stage that the point of one to one co-relationship between the receipt of input service in installation of capital goods and use of those capital goods in manufacture of the final products exported was raised. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Refund claim under Rule 5 of the Cenvat Credit Rules, 2004 for accumulated credit.
2. Dispute over the refund of Cenvat credit related to GTA service and erection, installation, commissioning service for a power plant.
3. Appeal against the Commissioner (Appeals) order regarding refund of service tax paid on input services.

Analysis:
1. The appellant, a manufacturer of cotton yarn and knitted fabrics, availed Cenvat credit for duty payment on DTA clearances. The dispute arose when the refund claim of accumulated credit was partially rejected by the Assistant Commissioner. The Commissioner reviewed the order and rejected a portion of the refund claim based on specific grounds raised by the Department.

2. The first ground for rejection was that a portion of the accumulated credit was related to GTA service for outward transportation of export goods, which the appellant was not entitled to claim. The second ground was that the credit for service tax on erection, installation, commissioning service for a power plant was claimed for goods exported before the plant started functioning. The Commissioner (Appeals) upheld the rejection of the GTA service credit but allowed the rejection of the power plant service credit.

3. The appellant appealed against the Commissioner (Appeals) order, arguing that a direct correlation between input services and exported goods was not necessary for claiming the refund under Rule 5. They relied on a Tribunal judgment to support their position. The Departmental Representative opposed the appeal, emphasizing the lack of use of input services in manufacturing the exported goods.

4. The Tribunal considered the arguments and previous judgments, including the one cited by the appellant. It noted that the one-to-one co-relationship between input services and exported products was not a requirement at the original order stage. As the issue was decided in favor of the assessee by a previous Tribunal decision, the Tribunal set aside the Commissioner (Appeals) order and allowed the appeal for refund of the accumulated credit.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the refund claim under Rule 5 of the Cenvat Credit Rules, 2004 based on the established legal principles and precedents.