2009 (7) TMI 605 - AT - Central Excise

100% EOU- Notification No. 22/2003-C.E., dated 31-3-03- The appellant is a 100% EOU engaged in the manufacture of Crabstick. The appellant was procuring Light Diesel Oil (LDO) without payment of duty under CT-3 certificate as per Notification No. 22/2003-C.E., dated 31-3-03. The facility of procurement of LDO without payment of duty under Notification No. 22/2003-C.E., dated 31-3-03 was withdrawn by the Board vide Circular No. 796/29/2004, dated 4-9-04 and it was clarified that 100% EOUs are entitled to avail the input credit on the duty paid on such goods and utilise the credit for payment of duty of DTA clearance and if for some reason, the credit cannot be utilised, the refund can be claimed under Rule 5 of Cenvat Credit Rules. After withdrawal of this facility, the appellants purchased LDO on payment of duty and filed refund claim under Section 11B of CEA, 1944 read with Rule 5 of Cenvat Credit Rules, 2004 of Rs.5,09,359/- which has been rejected on the ground that LDO was excluded from the definition of input and therefore the Cenvat credit in respect of the duty paid LDO procured by the appellant was not available. The Commissioner (Appeals) also observed that the rebate of duty paid on the materials used in export is allowed under Rule 18 of CER, 2002, and since the appellants had not followed the procedure, the appellants cannot claim rebate also. Held that- Section 11B entitles a buyer of the goods also to claim refund if he was not liable to pay the duty or if duty was paid in excess. This aspect has not been considered by either of the lower authorities. Under these circumstances, the duty paid becomes excess duty and consequently the purchaser become eligible to claim the duly subject to the claim having been filed within time and unjust enrichment not being made applicable. Appeal is allowed.

Summary

Issues:
Refund claim rejection based on Circular, eligibility of appellant for LDO without duty payment, refusal of CT-3 certificate, applicability of Notification No. 22/2003, entitlement to claim refund under Section 11B, unjust enrichment, export of manufactured goods.

Analysis:
The appellant, a 100% EOU manufacturing Crabstick, procured Light Diesel Oil (LDO) without duty payment under Notification No. 22/2003. The Board later withdrew this facility via Circular No. 796/29/2004, stating EOUs could avail input credit on duty paid goods, utilize it for DTA duty, or claim refund under Rule 5 of Cenvat Credit Rules. Post-withdrawal, the appellant bought LDO with duty payment and filed a refund claim of Rs.5,09,359 under Section 11B, rejected as LDO wasn't considered an input for Cenvat credit. The Commissioner (Appeals) noted rebate for export materials under Rule 18 of CER, 2002, not followed by the appellant, disallowing rebate claim.

The advocate argued the Board's Circular No. 799/32/2004-CX extended Cenvat credit to EOUs, enabling input credit and refund claims. They highlighted the continued validity of Notification No. 22/2003 during the relevant period, citing a Superintendant's letter refusing CT-3 certificate issuance due to pending Show Cause Notice. The appellant contended the Circular couldn't override an active notification, forcing them to pay duty for LDO.

The Tribunal considered both sides' arguments. It emphasized the validity of Notification No. 22/2003 during the relevant period, making the appellant eligible for duty-free LDO. Refusal of CT-3 certificate compelled duty payment, contrary to the appellant's eligibility under the notification. Section 11B allows buyers to claim refund if not liable for duty or paid in excess, a point overlooked by lower authorities. As the appellant's duty payment was unnecessary, the excess duty qualified for refund, subject to timely filing and absence of unjust enrichment, which didn't apply due to exported goods. The Tribunal ruled in favor of the appellant, granting the appeal and consequential relief.

In conclusion, the Tribunal upheld the appellant's entitlement to claim refund for duty paid on LDO, emphasizing the continued validity of Notification No. 22/2003 and the appellant's eligibility for duty exemption. The decision highlighted the importance of considering legal provisions like Section 11B and unjust enrichment in refund claims, ultimately granting relief to the appellant based on the circumstances presented.