2017 (5) TMI 942 - AT - Central Excise

100% EOU - refund claims - denial on account of non-availability of details as to the quantum of inputs used for manufacture of inputs during the month - Held that - the first appellate authority has ventured into hair splitting the reports given by the Superintendent on verification of the refund claims by recording that the Superintendent has not reported the verification report about the quantum of inputs used for manufacture of exported goods remain unutilized in the hand of manufacturer - this hair splitting may not serve the purpose of stated policy of Central Government of India i.e. to encourage the exports by Indian manufacturers - refund allowed - decided in favor of assessee.

Summary

Issues involved:
Appeal against orders-in-appeal regarding refund claims under Cenvat Credit Rules, 2004 and Notification No.5/2006-CE (NT) based on verification of inputs used for manufacturing exported goods.

Analysis:

1. Refund Claims under Cenvat Credit Rules, 2004:
The appellant, a 100% EOU engaged in manufacturing radiators and parts, filed refund claims as per Rule 5 of Cenvat Credit Rules, 2004 and Notification No.5/2006-CE (NT). The Jurisdictional Assistant/Dy Commissioner verified the claims and directed the Superintendent to submit a report. The adjudicating authority sanctioned the refund claims, which was challenged by Revenue in appeal. The first appellate authority reversed the decision citing non-availability of details on input usage for manufacturing. The appellant argued that they submitted refund claims as per the notification's requirements and cited precedent where refunds were allowed for exported goods.

2. Verification of Inputs for Exported Goods:
The dispute centered around the verification of inputs used for manufacturing goods exported by the appellant. The Revenue contended that specific input usage details were required as per the notification's clause. The Superintendent's report did not explicitly mention the quantum of inputs used for exported goods. However, the appellant maintained that all records were submitted for verification. Precedents like Ace Techniks and I.J. MUTHU FOODS PVT. LTD. were cited to support their arguments.

3. Decision and Rationale:
The Member (Judicial) found that the appellant availed CENVAT credit on inputs during the export period and the refund claims were sanctioned for exported goods. The first appellate authority's focus on specific input usage details was deemed unnecessary, as it did not align with the government's export promotion policy. It was noted that the appellant had submitted all records for verification. The decision to set aside the refund claims was considered erroneous, and the appeals were allowed based on the factual matrix of the case, without delving into the legal arguments presented by both sides.

In conclusion, the appellate tribunal ruled in favor of the appellant, allowing the appeals and upholding the refund claims for unutilized CENVAT credit related to the manufacturing and export of goods.