2009 (3) TMI 302 - HC - Customs

100% EOU - refund claims under Rule 5 of the Cenvat Credit Rules, 2004, for the unutilised credit availed by the respondent in respect of certain inputs used in the manufacture and export of their final product. claim was rejected on the ground that the respondent was not eligible for the availment and utilisation of Cenvat Credit Rules, 2004, as their final product was not chargeable to any duty under the Tariff Act. Held that 100% EOU is entitled to take Cenvat credit or the duty on the inputs procured indigenously, and when they are not in a position to utilise the same, they are entitled for the benefit of refund of the same under Cenvat Credit Rules Appeal rejected

Summary

Issues:
Challenge to order by Department of Customs on refund claims under Cenvat Credit Rules, 2004 for an Export Oriented Unit (EOU) manufacturing agricultural parts. Rejection of refund claims by Assistant Commissioner of Customs. Appeals before Commissioner of Customs (Appeals) setting aside the Orders-in-Original. Dismissal of appeal by CESTAT based on previous dismissals and precedents.

Analysis:
The case involves a dispute over refund claims filed by an EOU for unutilized credit under Cenvat Credit Rules, 2004, related to inputs used in manufacturing agricultural and farm equipment. The Assistant Commissioner of Customs rejected multiple refund claims, stating the final product was not chargeable to any duty under the Tariff Act. Subsequent appeals before the Commissioner of Customs (Appeals) resulted in setting aside the initial orders. The Department of Customs challenged this decision before the CESTAT, which dismissed the appeal citing previous dismissals involving the same respondent and issue. The Tribunal allowed the refund based on the EOU's entitlement to Cenvat credit and subsequent refund under the Rules.

The Department contended that Cenvat credit was not available to the respondent as per Rule 6 of the Cenvat Credit Rules, 2004. However, the Tribunal upheld the respondent's claim, emphasizing the EOU's eligibility for credit on inputs procured domestically and the right to refund if unable to utilize the credit. The Tribunal's decision was influenced by a previous order supporting the respondent's position, which had been upheld by higher authorities and the Court. The rejection of the Department's appeal was based on the consistency of decisions regarding the same issue involving the same respondent.

The High Court, after considering the arguments and precedents, rejected the Department's appeal. The Court highlighted the existing dismissal of appeals related to the same issue and respondent, emphasizing the importance of upholding consistent decisions. The Court's decision was influenced by the previous rulings and the lack of new material or appeals to challenge the established precedents. Consequently, the appeal by the Department of Customs was dismissed based on the existing legal framework and precedents set by prior judgments.