2017 (6) TMI 845 - AT - Central Excise

100% EOU - refund claim of accumulated CENVAT credit - rejection on the ground of non-availability of evidence for accumulation of credit in Form E-2 and also on account of time limitation - Held that - It is settled law that procedural infraction of notification/circular should be condoned if exports have really taken place - in the case of Mangalore Chemicals & Fertilizers Ltd. V. Deputy Commissioner 1991 (8) TMI 83 - SUPREME COURT OF INDIA while drawing distinction between the procedure condition which is technical in nature and a substantive condition, it was held that procedural lapse of technical nature can be condoned so that substantive benefit is not denied - in this case there was only a procedural lapse and therefore the impugned order is liable to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules 2004 for an EOU engaged in the manufacture and export of Thermistors/Sensors. Rejection of refund claim due to non-availability of evidence for accumulation of credit in Form E-2 and time-bar limitations. Dispute regarding the mandatory requirement of information in ER-2 Returns and reliance on ST-3 Returns for input service credit. Rejection of refund based on absence of Chartered Accountant certificate at the time of filing the claim.

Analysis:
The appellant, a 100% EOU involved in manufacturing and exporting Thermistors/Sensors, filed refund claims under Rule 5 of Cenvat Credit Rules 2004 for accumulated Cenvat credit from April 2007 to March 2011. The dispute arose when show-cause notices were issued citing non-availability of evidence for credit accumulation in Form E-2 and time-bar limitations, leading to rejection of the refund claim by the adjudicating authority. The Commissioner (Appeals) upheld this decision, prompting the appellant to file nine appeals challenging the rejection.

During the proceedings, the appellant argued that the rejection was primarily based on the alleged absence of information in ER-2 Returns, which is a mandatory requirement for EOUs under relevant rules. The appellant contended that they had provided the necessary information through ST-3 Returns, which was not considered by the authorities. They emphasized that the denial of refund solely based on ER-2 Returns' information omission was unjustified, especially when the credit was legitimately available, and export conditions were met. Citing the Supreme Industries case, the appellant stressed the need for a liberal view in technical violations of beneficial legislation like Cenvat credit.

Furthermore, the appellant challenged the rejection related to the absence of a Chartered Accountant certificate at the time of filing the claim. They argued that the subsequent submission of the certificate should have been considered by the Commissioner (Appeals) as expert evidence, as highlighted in the Qualcomm India Pvt. Ltd. case. The appellant relied on legal precedents like Mangalore Chemicals & Fertilizers Ltd. to argue that procedural lapses should not lead to substantive benefit denial, especially when exports have genuinely occurred.

In the final analysis, the Tribunal, represented by S.S. Garg, found merit in the appellant's arguments. Considering the procedural nature of the lapses and the substantive benefit at stake, the Tribunal set aside the impugned order and allowed all appeals of the appellant with consequential relief. The decision highlighted the importance of not denying substantial benefits due to procedural shortcomings and emphasized the need for a balanced approach in such cases.

This detailed analysis of the judgment showcases the legal intricacies involved in the dispute over refund claims, mandatory requirements, procedural lapses, and the overarching principle of ensuring substantive benefits are not unjustly denied due to technicalities.