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2021 (4) TMI 117 - AT - Central Excise100% EOU - Refund of unutilized Cenvat credit availed on inputs/input services - export of goods - appellant had not physically exported their goods but cleared the same to another EOU - physical export or not - HELD THAT - In the present case, the appellant is a 100% EOU, which has admittedly supplied the goods to another EOU and filed refund claims under Rule 5 read with Notification No.27/2012 dt. 18/06/2012. Further it is found that the goods were supplied by the appellant to another EOU after coming into force of the amendment in Rule 5. Further I find that with the insertion of clause (1A) in Explanation 1 to Rule 5 came into force vide Notification No.6/2015-CE(NT) dt. 01/03/2015 whereby export goods means any 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 therefore deemed exports are not entitled for cash refunds. This Tribunal in the case of M/S. WAVE MECHANICS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH 2019 (8) TMI 758 - CESTAT BANGALORE has held that cash refund is not admissible under rule 5 of CENVAT Credit Rules read with Notification No.27/2012-CE dt. 18/06/2012 in respect of clearances made by one EOU to another EOU on IUT basis. It was also held that the amounts in respect of cash refund has been claimed were debited in the cenvat credit account at the time of filing the refund claim as required under the said Notification and the appellant was entitled to take recredit of the cenvat credit. Further after going through the sub-section 3 of Section 142 of CGST Act, it is found that as per the said sub-section, every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944. The impugned order denying the cash refund is not sustainable in law and the appellant is entitled to cash refund as per sub-section 3 and sub-section 6(a) of Section 142 of CGST Act - Appeal allowed.
Issues Involved:
1. Entitlement to cash refund of unutilized Cenvat credit for goods cleared to another EOU. 2. Applicability of amendments to Rule 5 of Cenvat Credit Rules effective from 01/03/2015. 3. Interpretation and application of Section 142 of the CGST Act, 2017 regarding refund claims. Issue-wise Detailed Analysis: 1. Entitlement to Cash Refund of Unutilized Cenvat Credit for Goods Cleared to Another EOU: The appellant, a 100% Export Oriented Unit (EOU), claimed cash refunds for unutilized Cenvat credit on inputs/input services under Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 27/2012 CE (NT) dated 18-06-2012. The Deputy Commissioner restricted refunds to goods physically exported and rejected claims for goods cleared to other EOUs under Inter Unit Transfer (IUT). The Commissioner (Appeals) upheld this decision, allowing cash refunds only for January and February 2015 and not for March 2015 onwards. The Tribunal referenced the case of Wave Mechanics Pvt. Ltd. Vs. CCT, Bangalore, which held that cash refunds are not admissible for clearances made by one EOU to another on IUT basis but allowed recredit of the Cenvat credit. The Tribunal concluded that the appellant is entitled to cash refunds as the credit was debited in good faith, and the credit itself was never disallowed. 2. Applicability of Amendments to Rule 5 of Cenvat Credit Rules Effective from 01/03/2015: The lower authorities rejected the cash refund claims based on the amendment effective from 01/03/2015, which defined "export goods" as goods taken out of India to a place outside India, thus requiring physical export for cash refunds. The Tribunal confirmed that the amendment necessitated physical export for eligibility of cash refunds, thereby excluding deemed exports. However, the Tribunal emphasized that the appellant’s claims were valid under the existing law before the amendment and that the amounts debited in the Cenvat account should be refunded in cash as per the provisions of Section 142 of the CGST Act, 2017. 3. Interpretation and Application of Section 142 of the CGST Act, 2017 Regarding Refund Claims: The Tribunal examined sub-sections (3) and (6)(a) of Section 142 of the CGST Act, 2017. Sub-section (3) mandates that refund claims filed before, on, or after the appointed day should be disposed of according to the existing law, and any amount accruing should be paid in cash. Sub-section (6)(a) specifies that proceedings related to Cenvat credit claims should be resolved under the existing law, with admissible amounts refunded in cash. The Tribunal noted that the appellant had debited the amounts in their Cenvat account in good faith, expecting cash refunds. As the credit was not disallowed and remained in balance as of the GST implementation date, the Tribunal ruled that the appellant was entitled to cash refunds under the provisions of Section 142. Conclusion: The Tribunal allowed the appeals, holding that the appellant is entitled to cash refunds of the unutilized Cenvat credit as per the provisions of Section 142 of the CGST Act, 2017, despite the amendments requiring physical export for cash refunds. The Tribunal’s decision was based on the consistent interpretation of the law and previous rulings, ensuring that the appellant’s debited amounts are refunded in cash.
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