2025 (3) TMI 194 - AT - Central Excise

Rrefund of the duty paid in cash - appellants have procured capital goods under EPCG Scheme and have not availed CENVAT credit of the same - HELD THAT - In the instant case the procurement of capital goods being from a domestic manufacturer wherein policy provides that such domestic manufacturer can avail the refund of excise duty paid by them under the condition that the recipient the appellant in this case does not avail CENVAT credit. In the instant case the appellants are in a better position inasmuch as CENVAT credit was not available to them in case the supplier availed the refund. In fact the condition in Para 8.5 of the Exim Policy needs to be looked at from the supplier s angle and not from the recipient s angle in this case the appellant s angle. As long as the appellant has not availed the credit the appellant has not violated any condition of the Notification regarding the exhaustion of the available credit. As submitted by the appellants exhausting the credit necessarily means the credit they have taken and not certainly the credit which they have not taken. If the appellant had more credit they would have paid less in cash and if the credit was on the lower side they would have paid more in cash. The appellants contend that either way the situation is revenue neutral or the credit available at the hands of the buyers will not be altered by the manner in which the appellants pay duty on the products they cleared. Conclusion - The condition in the Exim Policy regarding the exhaustion of available credit should be viewed from the supplier s perspective not the recipient s. The appellants had not violated any conditions by not availing CENVAT credit. The impugned order set aside - appeal allowed.

Summary

The Appellate Tribunal, CESTAT Chandigarh, heard the case of M/s Medley Pharmaceuticals Ltd. regarding the availing of exemption under Notification No.56/2002 for refund of duty paid in cash on capital goods procured under the EPCG Scheme. The Revenue contended that the appellants should have availed CENVAT credit on the capital goods before paying in cash and claiming a refund. The Tribunal considered the interpretation of the Exim Policy, the Notification, and relevant case law to determine the appellants' compliance with the conditions for exemption.Issues Presented and Considered:1. Whether the appellants were required to exhaust the available CENVAT credit before paying in cash and claiming a refund under Notification No.56/2002?2. Whether the appellants' procurement of capital goods from domestic manufacturers under the EPCG Scheme exempted them from availing CENVAT credit?Issue-Wise Detailed Analysis:The Tribunal analyzed the relevant legal framework, precedents, key evidence, and findings to address the issues at hand. The appellants argued that they complied with the Exim Policy by not availing CENVAT credit on capital goods procured domestically under the EPCG Scheme. They relied on a previous Tribunal decision in their favor and contended that the intention of the Government was to substitute imports with domestic procurement to save foreign exchange.The Revenue argued that the appellants should have utilized the available CENVAT credit before paying in cash to claim a refund. They cited a Supreme Court case to support their position that the refunds claimed were excessive and incorrect due to the appellants' failure to comply with the Notification's conditions.Significant Holdings:The Tribunal referred to its previous decision involving the same appellants, where it was established that not availing CENVAT credit did not violate the Notification's provisions. The Tribunal emphasized that the condition in the Exim Policy regarding the exhaustion of available credit should be viewed from the supplier's perspective, not the recipient's. It concluded that the appellants had not violated any conditions by not availing CENVAT credit and allowed their appeals, setting aside the impugned orders.In conclusion, the Tribunal held that the appellants were not required to exhaust the available CENVAT credit before paying in cash and claiming a refund under Notification No.56/2002. The decision was based on a thorough analysis of the Exim Policy, Notification provisions, and the specific circumstances of the case.