2017 (5) TMI 1080 - AT - Central Excise

Refund claim - unutilised Cenvat credit which was availed on inputs and input services and finished goods cleared to 100% EOU - deemed exports - Held that - Although Rule 5 of CCR does not explicitly provide for deemed exports, there is no ground to interpret that the deemed exports are excluded from the purview of Rule 5 of CCR and the Notification issued there under for the material period. When the deemed exports would be eligible to be considered for working out the Net Foreign Exchange Earning (NFEE) and for all other export benefits, I do not see any reason why the deemed exports should be ignored for the purpose of the refund u/r 5 of CCR read with Notification issued there under - refund allowed - The appellant is however not eligible for any refund claimed on such deemed exports for the clearances made from 01.03.2015, if any, since such deemed export would not fall within the ambit of export - decided partly in favor of appellant.

Summary

Issues:
Refund of unutilised Cenvat credit for deemed exports to 100% EOU.

Analysis:
The appeal pertains to the refund of unutilised Cenvat credit by the Revenue against the Order-in-Appeal. The issue revolves around whether clearances to 100% EOU under CT-3 and ARE-3 can be considered as physical exports or deemed exports for the purpose of refund eligibility. The Department representative argued that only physical exports qualify for the refund, citing Rule 5 of Cenvat Credit Rules and Rule 19 of Central Excise Rules, 2002. However, the Tribunal found the Revenue's arguments baseless as the first Appellate Authority had already deemed these clearances as exports, relying on previous Tribunal decisions.

Upon reviewing the relevant rules and notifications, the Tribunal concluded that deemed exports, including supplies to 100% EOU, are eligible for refund under Rule 5 of CCR. The Tribunal emphasized that while Rule 5 does not explicitly mention deemed exports, there is no justification to exclude them from the refund provisions. The Tribunal referenced various judicial precedents, such as the cases of METFLOW CAST, E I DUPONT INDIA, NBM INDUSTRIES, and SHILPA COPPER WIRE INDUSTRIES, which supported the eligibility of deemed exports for Cenvat credit refunds.

Based on the established legal principles and precedents, the Tribunal held that the appellants were entitled to the refund of accumulated CENVAT credit on inputs for the deemed exports to 100% EOU. The refund was approved for specific quarters before a certain amendment date, while post-amendment clearances were deemed ineligible for the refund. The Tribunal upheld the first Appellate Authority's decision, which aligned with Tribunal and High Court precedents, and rejected the appeal while disposing of the cross objection filed by the respondent.

In conclusion, the Tribunal's judgment clarified that clearances to 100% EOU under CT-3 and ARE-3 can be treated as deemed exports eligible for Cenvat credit refunds under Rule 5 of CCR, in line with established legal interpretations and judicial decisions.