2007 (11) TMI 249 - AT - Central Excise

Refund of the unutilized credit - refund claim rejected as the respondent exported the goods under advance licence scheme by which they were procuring duty free material - refund claim under Rule 5 of Cenvat Credit Rules cannot be denied unless the assessee claimed drawback or rebate since assessee is not getting benefit of drawback or rebate, refund of unutilized credit is admissible - appeal filed by the Revenue is rejected

Summary

Issues:
- Appeal against rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004 for unutilized credit.
- Interpretation of Rule 5 of Cenvat Credit Rules, 2004 and Rule 18 of the Central Excise Rules, 2002 regarding double benefit.
- Application of Notification No. 11/2002-C.E. (N.T.) in refund claims.
- Comparison of decisions in similar cases for eligibility of refund.
- Assessment of eligibility for refund under Rule 5 of Cenvat Credit Rules based on specific circumstances.

Analysis:

Issue 1:
The Revenue filed appeals against the rejection of refund claims under Rule 5 of Cenvat Credit Rules, 2004 for unutilized credit. The respondents had applied for the refund, which was initially rejected by the adjudicating authority but later allowed by the Commissioner (Appeals), leading to the Revenue's appeal.

Issue 2:
The main contention was the interpretation of Rule 5 of Cenvat Credit Rules, 2004 and Rule 18 of the Central Excise Rules, 2002 regarding the prohibition of double benefit. The Revenue argued that the respondents were procuring duty-free material under the advance license scheme and exporting goods, claiming a refund on the raw material used, which amounted to double benefit. However, the respondents argued that there was no scope for double benefit as per the Notification No. 11/2002-C.E. (N.T.) and relied on a Tribunal decision to support their claim.

Issue 3:
The Notification No. 11/2002-C.E. (N.T.) issued under Rule 5 of Cenvat Credit Rules, 2002 was crucial in determining the admissibility of the refund claim. The Tribunal's decision in a similar case highlighted the eligibility for a refund of accumulated Cenvat credit against exports made under specific schemes, emphasizing the government's policy to promote exports without causing impediments.

Issue 4:
Comparing decisions in similar cases, the Tribunal found that unless the assessee claimed drawback or rebate, a refund claim under Rule 5 of Cenvat Credit Rules could not be denied. The Tribunal emphasized that in cases where duty-free material was used for manufacturing exported goods, the refund of excise duty paid on raw materials was permissible, and the contention of double benefit was not sustainable.

Issue 5:
After considering the arguments from both sides and examining the record, the Tribunal concluded that the respondents, under the advance license scheme, were entitled to a refund of excise duty paid on raw materials used in manufacturing exported goods. The Tribunal rejected the Revenue's appeal, emphasizing that the respondents were not availing double benefits and were eligible for the refund as per the specific circumstances of the case.