2020 (7) TMI 52 - AT - Central Excise

100% EOU - Refund of unutilised cenvat credit - Revenue s arguments in their appeals that the respondent is not manufacturing any excisable goods is devoid of any merit and is contrary to the facts on record - HELD THAT - From the impugned order and the orders of the original authority as well as the documents submitted by the Counsel for the Respondent, we find that the respondent is indeed registered for manufacture of excisable goods by the department themselves. Central excise tariff heads of the goods which are manufactured are also indicated. We are sure, if the department had gone through these documents, they would have had no doubt that the respondent is manufacturing excisable goods. It is also not in dispute that the respondent has been filing ER-1 returns and also been clearing some manufactured goods on payment of excise duty to Domestic Tariff Area. In view of the above, the entire argument that the respondent is not a manufacturer of excisable goods is without any force. The respondent has also been registered under the service tax law with the department for rendering taxable services. The argument of the Revenue that the respondent is not rending any taxable service is contrary to the registration given by the department and is not substantiated. As far as the argument that Notification No. 41/2007-ST is not a scheme of rebate is concerned, the department appears to have ignored that the refund applications were filed under Rule 5 of the CCR, 2004 which clearly provides for refund of unutilised cenvat credit on inputs and input services in case of export of goods or export of services. Notification No. 41/2007-ST only prescribes the procedures, conditions and safeguards for such refund. There is nothing in the appeal to show that the respondent is not entitled to refund of cenvat credit under Rule 5 of CCR, 2004. In fact, the appeal is silent about this rule itself. The Revenue s appeal is frivolous and has been filed without any application of mind and without even checking the basic facts including the fact that the respondent is registered with the department both under Central Excise under Service Tax and has been clearing excisable goods to Domestic Tariff Area on payment of excise duty and has also been clearing such goods for export under ARE-1 duly signed by the officers of the department - Appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal filed by Revenue against Order-in-Appeal
- Refund claims for unutilized cenvat credit
- Seven appeals decided by First Appellate Authority
- Grounds of Revenue's appeal
- Respondent's manufacturing activities and export of goods
- Eligibility for refund of unutilized cenvat credit
- Notification No. 41/2007-ST and Rule 5 of CCR, 2004

Analysis:
1. The appeal was filed by the Revenue against Order-in-Appeal No.154-160/Kol-III/2011, challenging the refund claims for unutilized cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The respondent, a 100% EOU, sought refunds for cenvat credit on inputs and input services used in manufacturing goods and providing services that were exported. The First Appellate Authority decided on seven appeals, with the Revenue's appeals rejected and the assessee's appeals allowed.

2. The Revenue contended that the respondent was not a manufacturer of excisable goods and had not exported any such goods, therefore, they were not eligible for the refund. They argued that the respondent's activities did not qualify as manufacturing, and the service tax credit was not refundable under Notification No. 41/2007-ST. They also claimed that the Commissioner misunderstood the scope of manufacture for EOUs and that the respondent was not entitled to cenvat credit under the Foreign Trade Policy.

3. The Respondent's counsel argued that the Revenue's contentions were incorrect. They provided evidence of their manufacturing activities, registration with the Department, and compliance with excise duty payments. The respondent had exported goods, filed necessary returns, and followed prescribed procedures for claiming refunds under Rule 5 of CCR, 2004.

4. The Tribunal found that the Revenue's arguments lacked merit. The respondent was registered for manufacturing excisable goods, as evidenced by documents and filings. The Revenue's claim that the respondent was not rendering taxable services under service tax law was also unfounded. Additionally, the Tribunal noted that the refund applications were filed under Rule 5 of CCR, 2004, which allows for refunds of unutilized cenvat credit on inputs and input services for exported goods.

5. Ultimately, the Tribunal rejected the Revenue's appeal, citing the lack of factual basis and failure to consider the respondent's registration, compliance, and eligibility for cenvat credit refunds under Rule 5 of CCR, 2004. The appeal was deemed frivolous and lacking in merit, with the Tribunal upholding the decision of the First Appellate Authority in favor of the respondent.

This detailed analysis covers the various issues involved in the legal judgment, addressing the arguments presented by both parties and the Tribunal's reasoning for rejecting the Revenue's appeal.