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2019 (8) TMI 758 - AT - Central Excise100% EOU - Cash Refund of unutilized CENVAT credit - deemed exports - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.27/2012-CE dated 18.6.2012 - Applicability of provisions of Section 142 of the Central Goods and Service Tax Act, 2017 - HELD THAT - In the present case, appellant is a 100% EOU who has admittedly supplied the goods to another EOU and filed refund claims under Rule 5 read with Notification No.27/2012 dated 18.6.2012. Further, the goods were supplied by the appellant to another EOU after coming into force of the amendment in Rule 5. The insertion of Clause (1A) in Explanation 1 of Rule 5 of CENVAT Credit Rules effective from 1.3.2015 whereby export of goods means only those goods which are to be taken out of India to a place outside India which means that there has to be a physical export and for deemed export , cash refund is not permissible. Applicability of provisions of Section 142 of the Central Goods and Service Tax Act, 2017 - HELD THAT - The findings of the original authority that the amount of refund claim would lapse under Section 142 of Central Goods and Service Tax Act, 2017 is not tenable in law, since there was no dispute about the fact that at the time of filing of refund claim, the appellant had debited the whole amount in their CENVAT account as required by the then Notification No.27/2012 dated 18.6.2012 and when the GST was introduced, there was no amount lying in the balance in the appellant s record. Further, provision to subsection (3) of Section 142 of Central Goods and Service Tax Act, 2017 is not applicable in the present case - appellants are entitled to take the re-credit of the CENVAT for which they had filed the refund claims and the said amount will not lapse as per Section 142 of the Central Goods and Service Tax Act, 2017. The appellants are not entitled to cash refund but they are entitled to take re-credit of the same - Appeal disposed off.
Issues:
- Entitlement to cash refund under Rule 5 of CENVAT Credit Rules for deemed exports - Interpretation of the definition of 'export goods' post-amendment in Rule 5 effective from 1.3.2015 - Applicability of previous judgments on similar issues - Validity of rejection of cash refund by lower authorities - Lapse of refund amount under Section 142 of Central Goods and Service Tax Act, 2017 Analysis: 1. Entitlement to Cash Refund for Deemed Exports: The appellant, a 100% EOU, filed refund claims seeking cash refund of unutilized CENVAT credit for deemed exports. The authorities rejected the claims, stating cash refund was only permissible for physically exported goods or goods cleared to other EOUs termed as Deemed Exports. The appellant argued that the goods cleared to another EOU were ultimately exported in physical form, fulfilling the requirement of export. The appellant relied on Foreign Trade Policy provisions and a previous case to support their claim. 2. Interpretation of 'Export Goods' Post-Amendment: The amendment in Rule 5 of CENVAT Credit Rules effective from 1.3.2015 defined 'export goods' as goods taken outside India. The lower authorities rejected the cash refund based on this definition, stating that physical export was necessary. The Tribunal cited a previous case where it was held that refund is only allowed for goods physically taken outside India, supporting the rejection of cash refund for deemed exports. 3. Applicability of Previous Judgments: The appellant cited previous judgments to argue in favor of their entitlement to cash refund for deemed exports. However, the Tribunal found these judgments irrelevant as they pertained to periods before the amendment in the definition of 'export goods'. The Tribunal upheld the findings of the lower authorities regarding the rejection of cash refund. 4. Validity of Rejection of Cash Refund: After considering submissions from both parties, the Tribunal found no infirmity in the rejection of cash refund by the lower authorities. It upheld the findings that the appellant was not entitled to cash refund for deemed exports, in line with the amended definition of 'export goods'. 5. Lapse of Refund Amount under Section 142: The original authority held that the refund amount would lapse under Section 142 of the Central Goods and Service Tax Act, 2017. However, the Tribunal found this conclusion untenable as the appellant had debited the amount in their CENVAT account before the introduction of GST. The Tribunal ruled that the appellants were entitled to take re-credit of the CENVAT amount, and the amount would not lapse under Section 142. In conclusion, the Tribunal held that the appellants were not entitled to cash refund for deemed exports but could take re-credit of the same. All four appeals were disposed of accordingly.
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