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2018 (5) TMI 1562 - AT - Central Excise100% EOU - Refund claim of cenvat credit - no physical exports - denial on the ground that they had cleared the vaccines under order of UNICEF but did not physically export the same out of India - Held that - It is undisputed that appellant had participated in International Competitive Bidding for supply of vaccines to UNICEF, Denmark for immunisation programme in India and the said supplies were made to various locations in India as per the directions of UNICEF, Denmark and the said action was taken to save logistical expenses of movement of goods from India to Denmark and back. The lower authorities have rejected the refund claim on the ground that during the period in question, the definition of export under Rule 5 which was inserted by an explanation requires that there should be physical exports of the goods and nothing else - this is the law for the period in question in the appeal and has been correctly enunciated by the learned 1st Appellate Authority. Refund rightly rejected - appeal dismissed - decided against appellant.
Issues: Refund of accumulated CENVAT credit for duty paid on inputs and tax paid on input services used in the manufacture of final products related to the export of goods without physical export.
Analysis: 1. Refund Claim Dispute: The appeal revolved around a refund claim by manufacturers of drugs and vaccines, who were 100% EOUs, for accumulated CENVAT credit on duty paid on inputs and tax on input services used in manufacturing final products. The claim was based on the export of goods to UNICEF under International Competitive Bidding during January to March 2016. The appellant argued that although the goods were not physically exported out of India, they were sold to UNICEF under international bidding, justifying the refund. However, the adjudicating authority and the 1st Appellate Authority rejected the claim, stating that there was no physical export as required by the law. 2. Appellant's Submission: The appellant's representative, a Chartered Accountant, contended that the vaccines were manufactured for export as per their license and were supplied to UNICEF under International Competitive Bidding. It was argued that the purchases by UNICEF were financed by international agencies, and legal agreements bound the country to consider these transactions as exports. The appellant provided documents supporting the export of supplies to UNICEF for immunization programs in India. The 1st Appellate Authority rejected the claim, citing the lack of evidence to classify the clearances as deemed exports under the Foreign Trade Policy post-2015. 3. Judicial Finding: The Member (Judicial) analyzed the case and noted that the appellant, being a 100% EOU, manufactured goods solely for export purposes. The supplies made to UNICEF under International Competitive Bidding were directed to various locations in India to save logistical expenses. The lower authorities rejected the refund claim based on the requirement of physical export under Rule 5 during the period in question. The Member upheld the decision, emphasizing that the law at that time mandated physical export, as correctly interpreted by the 1st Appellate Authority. The detailed and reasoned findings of the lower authority were deemed appropriate, leading to the rejection of the appeal. The judgment was pronounced on 24/05/2018, maintaining the decision against the appellant's contentions.
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