2024 (7) TMI 682 - AT - Central Excise

Refund claim of duty paid under protest - whether the ground raised in the appeal that since M/s. BHEL had imported the goods by paying the duty under protest and so would have availed credit of the said duty and therefore the respondent is not eligible for refund is sustainable or not? - Rule 6(6)(vii) of CENVAT Credit Rules, 2004 - Principles of unjust enrichment. HELD THAT - The bar under sub-rule (1) of Rule 6 not to avail credit of goods which are exempted from payment of duty is not applicable to inputs meant for use in the manufacture of finished products cleared to Mega Power Projects in terms of Notification No. 6/2006-CE. Further, in the present case, the respondent has filed the refund claim as an ultimate consumer and therefore whether the supplier M/s. BHEL has availed credit or not is of no relevance. The Department if aggrieved of wrongful availment of credit has to initiate proceedings against M/s. BHEL. The refund of the duty paid by the ultimate consumer cannot be denied alleging that the supplier has availed credit. When the duties are exempted for supplies made to Mega Power Project, the same cannot be frustrated by imposing conditions which are beyond the control of the respondent. In the present case, the power project has been constituted by 5 units each of the capacity of 270MW. There is no ground to differ with the view taken by Adjudicating Authority and the Commissioner (Appeals). Unjust enrichment - HELD THAT - It is seen that both M/s. BHEL as well as EPIL have filed disclaimer certificates before the Department that the incidence of duty has been borne by respondent. Therefore there is no issue of unjust enrichment also - the Adjudicating Authority as well as the Commissioner (Appeals) have correctly analysed the refund claim and sanctioned the same. The appeal filed by the Department seems to be of misconception of facts and law. The appeal filed by the Department is dismissed.

Summary

Issues Involved:
1. Eligibility of refund claim under Notification No. 06/2006-CE.
2. Compliance with the definition of Mega Power Project.
3. Availment of CENVAT credit by M/s. BHEL.
4. Application of Rule 6(6) of CENVAT Credit Rules, 2004.
5. Issue of unjust enrichment.

Issue-wise Detailed Analysis:

1. Eligibility of Refund Claim under Notification No. 06/2006-CE:
The respondent, engaged in setting up the Amaravathi Thermal Power Project, filed for a refund of excise duty paid by M/s. BHEL on goods supplied, which were initially exempted under Notification No. 06/2006-CE. The refund was sanctioned after the necessary certificate from the Ministry of Power was furnished, confirming the exemption eligibility.

2. Compliance with the Definition of Mega Power Project:
The Department's appeal argued that the project did not meet the "Mega Power Project" criteria as the individual units were less than 1000 MW. However, the Adjudicating Authority and Commissioner (Appeals) upheld that the combined capacity of 1350 MW (5 units x 270 MW) met the requirements. The Notification No. 21/2002-Cus, which defines "Mega Power Project," was linked to the excise notification, and the project was certified by the Joint Secretary to the Government of India, Ministry of Power.

3. Availment of CENVAT Credit by M/s. BHEL:
The Department contended that the refund was ineligible as M/s. BHEL availed CENVAT credit on the duty paid. The Adjudicating Authority held that the issue of CENVAT credit should be dealt with separately with M/s. BHEL, not affecting the respondent’s refund claim. The Tribunal confirmed that the respondent, as the ultimate consumer, was entitled to the refund, irrespective of M/s. BHEL's credit availment.

4. Application of Rule 6(6) of CENVAT Credit Rules, 2004:
The Department argued that Rule 6(6) of CCR, 2004, which exempts goods supplied against International Competitive Bidding from certain provisions, was not applicable as duties were paid on imported goods. The Tribunal clarified that the bar on availing credit under Rule 6(1) does not apply to inputs used for manufacturing goods supplied to Mega Power Projects. The refund claim was valid as the ultimate consumer filed it, and any credit issue with M/s. BHEL should be addressed separately.

5. Issue of Unjust Enrichment:
Both M/s. BHEL and EPIL provided disclaimer certificates, stating they did not intend to file for a refund, and the incidence of duty was borne by the respondent. The Tribunal found no issue of unjust enrichment, confirming that the refund claim was correctly analyzed and sanctioned by the Adjudicating Authority and the Commissioner (Appeals).

Conclusion:
The Tribunal dismissed the Department's appeal, reiterating that the respondent was eligible for the refund under the exemption notification, the project met the Mega Power Project criteria, and the issue of CENVAT credit should not affect the refund to the respondent. The Tribunal upheld the decisions of the Adjudicating Authority and the Commissioner (Appeals), confirming the respondent's entitlement to the refund.