2023 (5) TMI 331 - AT - Central Excise

Refund claim - intermediate goods are cleared to another EOU for the purpose of use in manufacture of goods which are finally exported - applicability of Rule 5 of Cenvat Credit Rules in case of deemed exports - refund claim is hit by limitation as provided by Section 11B of the Central Excise Act, 1944 or not? - HELD THAT - The issue whether Rule 5 of Cenvat Credit Rules, 2004 is applicable in the case where the intermediate goods are cleared to another EOU for the purpose of use in manufacture of goods which are finally exported whether Rule 5 of Cenvat Credit Rules is applicable to the case of deemed exports, is no more res integra - In the case of SV. BUSINESS PVT. LTD. VERSUS COMMISSIONER OF C. EX., THANE-I 2005 (10) TMI 171 - CESTAT, MUMBAI , Tribunal has held that There is nothing in the said Rule 5 of Cenvat Credit Rules, 2001 to suggest that the goods must be directly cleared from the factory for export and even if the inputs are used in the manufacture of intermediate products and final products which are ultimately cleared for export, refund of Modvat credit would be admissible - thus, the refund claims filed cold not have been rejected on this count. Time Limitation - HELD THAT - As per para 6 of N/N. 5/2006-CE(NT) dated 14.03.2006 specifically provides that refund claim has to be filed before the expiry of the period specified in section 11B of the Central Excise Act, 1944 (1 of 1944). As per Section 11B, time limit of one year has been prescribed for filing the refund claim which is evident from reading of Section 11B(1). The issue as to what should be the date from which the period of one year is to be computed has been decided by the Larger Bench of the Tribunal in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. 2018 (2) TMI 946 - CESTAT BANGALORE wherein the Tribunal has held that the period has to be counted from the end of the quarter to which the refund claim pertains. The relevant date needs to be considered from the end of the quarter - It is found that out of four refund claims under consideration, only the first refund claim for the amount of Rs.34,51,586/- for the period October 2009 to December 2009 has been filed beyond the period of one year as prescribed under Section 11B and would be hit by limitation. Other refund claims have been filed within the period of limitation - the refund claims for the quarters January 2010 to March 2010, April 2010 to June 2010 and July 2010 to September 2010 are admissible to the appellant whereas the refund claim for the quarter October 2009 to December 2009 is hit by limitation. The impugned order needs to be set aside in respect of the three quarters for which we have held that refund claims would be admissible - Appeal allowed in part.

Summary

Issues Involved:
1. Applicability of Rule 5 of Cenvat Credit Rules, 2004 to deemed exports.
2. Limitation period for filing refund claims under Section 11B of the Central Excise Act, 1944.

Summary:

Issue 1: Applicability of Rule 5 of Cenvat Credit Rules, 2004 to Deemed Exports

The appellant argued that clearance to 100% EOU is considered export under Rule 5 of the Cenvat Credit Rules, 2004. The Tribunal noted that this issue has been adjudicated in several cases, including Shilpa Copper Wire Industries, NBM Industries, and Nash Industries, where it was held that refunds under Rule 5 are eligible in cases of deemed exports. The Tribunal referenced the definition of "export" under the Customs Act, 1962, and various judicial pronouncements, concluding that deemed exports are not the same as physical exports. However, based on precedents, the Tribunal ruled in favor of the appellant, stating that Rule 5 is applicable to deemed exports.

Issue 2: Limitation Period for Filing Refund Claims under Section 11B

The appellant contended that Section 11B does not specify a "relevant date" for deemed exports, making the rejection of refund claims on limitation grounds invalid. The Tribunal examined various judgments, including those of the Madhya Pradesh High Court and the Madras High Court, and concluded that the relevant date should be considered from the end of the quarter in which the refund claim pertains, as decided in Span Infotech (India) Pvt. Ltd. Consequently, the Tribunal found that only the first refund claim for the period October 2009 to December 2009 was filed beyond the one-year period and is thus time-barred. The other refund claims were filed within the limitation period.

Conclusion:

The Tribunal allowed the appeal partly, ruling that refund claims for the quarters January 2010 to March 2010, April 2010 to June 2010, and July 2010 to September 2010 are admissible, while the refund claim for the quarter October 2009 to December 2009 is barred by limitation. The impugned order was set aside for the admissible quarters.