2017 (11) TMI 894 - AT - Customs

Refund of unutilized CENVAT credit - Proper and original documents relating to details of input used in the export goods, credit availed thereon, stock position of impugned inputs as on 31.03.2006 and Shipping Bills have not submitted by the appellant alongwith the claim in the absence of which claim could not be finalized - Whether refund is sanctionable in case where proper and original document have not been submitted by the appellants at the time of filing but filed subsequently? - Held that - The argument putforth by the appellant is very clear and leaves no doubt as to the fact that credit lying in balance relates to inputs used in the manufacture of export goods. It is a settled law that certificates issued by the qualified professionals like Chartered Accountant cannot be rejected unless proved wrong by definite evidence - refund allowed. Whether benefits of CBEC Circular No. 828/5/2006-CX dt. 20.04.2006 are admissible to the appellant under the facts and circumstances of the case? - Held that - Para-4 of the Circular provides that the 80% amount can be refunded within 15 days from the date of filing refund claim, if no demand of short levy is pending recovery. In this regard, since the refund was rejected by the adjudicating authority at the adjudication stage in view of pending demand, the issue whether CBEC Circular was applicable at that material time need not be taken up at this stage. The pendency of demand is an ongoing process which keeps changing from time to time. Hence benefit of circular can be given on merits at the material time only. Whether the AR1 s, Shipping Bills, invoices and other documents submitted with refund application are proper documents for sanctioning refund claim? - Held that - as proof of export is established and procedural lapses have been rectified by the appellant, it is observed that compliance of the requirements of N/N. 5/2006-CE(NT) dated 14.03.06 has been done - substantial benefit cannot be denied for procedural lapses - refund allowed on this ground. Whether the calculation of credit accrued on inputs claimed to be used in the manufacture of export goods supported by the certificate of Chartered Accountant is acceptable? - Held that - In Para-4 of the certificate, amount of total credit, credit relating to input used in export goods, credit used in discharging duty liability and the balance lying unutilized has been clearly given which leaves no scope of ambiguity. On the plea of difference in calculation, it is observed that while making the calculation the adjudicating authority has taken into consideration the certificate of Chartered Accountant dated 09.05.06 which is with reference to one model namely SPEEDY only. I have pursued the Bill of material submitted vide letter dated 10.05.06 alongwith Chartered Accountant Certificate dated 09.05.06 as well as grounds of appeal - The adjudicating authority has calculated the figure of ₹ 7,59,38,323/- by multiplying total vehicles by ₹ 2254.50/- P which was not warranted in view of the details given in Para-4 of the certificate dated 09.05.06 which clearly indicates that credit of ₹ 945/- lakhs is attributable to inputs used in export of 24607 scooters and 9076 motor cycles; the fact that credit per vehicle of scooter and motor cycle may not be the same; the fact that ₹ 2254.50P. relates to speedy model of scooter only and has been accepted by the adjudicating authority as mentioned in para-2 of page 7 of the adjudication order. Under the circumstances, the plea of difference in calculation is not sustainable. Whether lack of correlation between invoice ARE-1 s and non-mentioning of engine number and chasis number on the Shipping Bill are reasonable cause to reject the refund claim? - Held that - It is observed that since the lapses are procedural in nature and the export of goods has been proved by the bill of lading as well as the certificate given by the Customs officer on the back of ARE-1 s submitted by the appellant, the plea is not sustainable. Whether it is mandatory on the part of the applicants to file the refund claim on quarterly basis? - Held that - there is no bar under the notification to the file the refund claim on annual basis which is evident from the provisions of para-2 of the notification wherein no such condition has been imposed. It provides that such refund cannot be submitted more than once in a quarter. Under the circumstances the plea is not sustainable and refund is not deniable on this ground. Whether the view of the adjudicating authority that claim is not sanctionable on the grounds of possibilities of its utilization when the factory goes in the production and effects domestic clearance? - Held that - the appellants have pleaded that the factory of the appellant remained closed and as a result, the credit lying in balance cannot be utilized as there were no domestic clearances - reliance placed in the case of Bishen Dyeing Printing & Weaving Mills 2007 (1) TMI 8 - CESTAT, MUMBAI , where it was held that the credit lying was on account of non-utilization in a particular month and the same cannot be kept pending for the future. As such, the refund is permissible under Rule 5 read with Rule 3 of the Cenvat Credit Rules, 2002. - the balance of credit lying unutilized is refundable to the appellants. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Submission of proper and original documents.
2. Applicability of CBEC Circular No. 828/5/2006-CX dated 20.04.2006.
3. Adequacy of documents submitted with the refund application.
4. Calculation method of credit accrued on inputs used in export goods.
5. Correlation between invoices and shipping documents.
6. Filing of refund claims on a quarterly basis.
7. Possibility of credit utilization after factory resumes production.

Issue-wise Detailed Analysis:

1. Submission of Proper and Original Documents:
The Commissioner (Appeals) observed that the appellant submitted the necessary documents, including the Bill of Material and Chartered Accountant's Certificate, after the initial filing. The adjudicating authority's rejection based on procedural lapses was overturned, as the appellant rectified these errors subsequently. The Tribunal upheld that substantial benefits cannot be denied for procedural lapses, citing precedents like Tisco and Formica India.

2. Applicability of CBEC Circular No. 828/5/2006-CX dated 20.04.2006:
The benefit of the CBEC Circular, which allows for an 80% refund within 15 days, was denied because of pending demands against the appellant. The Tribunal noted that the pendency of demands is a dynamic process and the applicability of the circular should be determined based on the merits at the material time.

3. Adequacy of Documents Submitted with the Refund Application:
The Tribunal found that the documents submitted by the appellant, including the Bill of Lading and Chartered Accountant's Certificate, were sufficient to prove the export of goods. The Assistant Commissioner confirmed this sufficiency, and the procedural lapses were deemed rectified.

4. Calculation Method of Credit Accrued on Inputs Used in Export Goods:
The adjudicating authority's rejection of the calculation method, which was based on standard rather than actual figures, was overturned. The Tribunal accepted the Chartered Accountant's Certificate, which indicated that the calculations were based on actual records. The discrepancy in calculations was attributed to a misunderstanding of the different credit amounts for various models.

5. Correlation Between Invoices and Shipping Documents:
The Tribunal found that the lack of correlation between Central Excise invoices and shipping bills, as well as the absence of engine and chassis numbers on ARE-1 forms, were procedural issues. Since the export of goods was proven by other documents, these lapses were not grounds for rejecting the refund claim.

6. Filing of Refund Claims on a Quarterly Basis:
The Tribunal clarified that the notification does not mandate filing refund claims on a quarterly basis. The provision only restricts filing more than once in a quarter, allowing for annual claims. Therefore, the refund claim was not deniable on this ground.

7. Possibility of Credit Utilization After Factory Resumes Production:
The Tribunal held that the possibility of future utilization of credit does not justify denying the refund. Citing judgments like Bishen Dyeing Printing & Weaving Mills and Navbharat Industries, the Tribunal emphasized that Rule 5 of the Cenvat Credit Rules, 2004, provides for refund of accumulated credit if it cannot be utilized, irrespective of future production possibilities.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the Commissioner's decision to allow the refund claim. It was established that the appellant complied with the procedural requirements and provided adequate proof of export. The Tribunal upheld the principle that substantial benefits should not be denied due to procedural lapses and that the refund of unutilized credit is a substantive right under the Cenvat Credit Rules.