2009 (12) TMI 344 - AT - Central Excise

Cenvat Credit- The appellant manufacture and export yarn falling under chapter 55 of the Central Excise Tariff and also avail Cenvat credit of the duty on the inputs used in the manufacture of the yarn. The Appellant exported yarn under bond without payment of duty as per the provisions of Rule 19 of the Central Excise Rules, 2002. the Appellant, as per the provisions of Rule 5 of the Cenvat Credit Rules, 2002, applied for cash refund of unutilised Cenvat credit of Rs. 39,87,276/- which was sanctioned by the Assistant Commissioner vide order-in-original. The Department filed a review appeal to CCE (Appeals) against the Assistant Commissioner s order which was allowed by the CCE (Appeals) vide order-in-Appeal and the Assistant Commissioner s order sanctioning cash refund of the Cenvat credit accumulated due to exports, was set aside. It is against this order that the present appeal along with stay application has been filed. Held that- non-production of customs certified copies of shipping bills along with the refund application is only a remediable defect for which the refund claim cannot be denied when subsequently the customs certified copies of shipping bills were produced. A substantive claim cannot be denied for a minor procedural violation. In view of the above discussion, we are prima facie of the view that there is merit in the appellant s plea that the refund order has been wrongly set aside by the CCE (Appeals). The stay petition is allowed.

Issues Involved:
1. Admissibility of refund claim for the period beyond the specified quarter.
2. Requirement of submitting original or customs-certified photocopies of shipping bills with the refund claim.
3. Procedural irregularities in the refund claim process.

Issue-wise Detailed Analysis:

1. Admissibility of Refund Claim for the Period Beyond the Specified Quarter:

The appellant exported yarn under bond without payment of duty and claimed a cash refund of unutilized Cenvat credit for the quarter July 2007 to September 2007. The CCE (Appeals) set aside the refund on the grounds that some exports occurred after September 2007, making the refund inadmissible for that quarter. The appellant argued that the relevant date of export is the date of the 'let export' order as per the Supreme Court's judgment in Union of India v. Asian Food Industries and Notification No. 41/07-ST, which considers the date of export as the date on which the proper officer permits clearance and loading of goods for export.

The tribunal found that the refund claim, filed within the limitation period, included goods cleared for export within the specified quarter but physically exported in October 2007. The tribunal held that the refund should not be denied merely because some goods were exported in the subsequent month, as the claim was within the prescribed limitation period and the goods had been cleared for export under bond during the specified quarter.

2. Requirement of Submitting Original or Customs-Certified Photocopies of Shipping Bills with the Refund Claim:

The CCE (Appeals) also denied the refund because the appellant did not submit the original or customs-certified photocopies of shipping bills with the refund claim. The appellant contended that self-certified copies were submitted initially, and customs-certified copies were provided later with the memorandum of cross-objection. The tribunal noted that the non-submission of customs-certified copies with the initial refund application is a procedural irregularity that was subsequently rectified. The tribunal emphasized that a substantive claim should not be denied for a remediable procedural defect, especially when the required documents were eventually submitted.

3. Procedural Irregularities in the Refund Claim Process:

The appellant argued that the grounds for setting aside the refund were procedural irregularities, which should not result in the rejection of the refund claim. The tribunal concurred, referencing the CBEC's Central Excise Manual and Board's Circular No. 220/54/96-CX, which consider procedural irregularities as remediable defects. The tribunal held that denying the refund for minor procedural violations, when the substantive conditions were met, was improper.

Conclusion:

The tribunal found merit in the appellant's arguments, noting that the refund claim was filed within the limitation period and procedural irregularities were subsequently rectified. The tribunal waived the requirement of pre-deposit and stayed the recovery of the alleged erroneous refund until the disposal of the appeal, allowing the stay petition.

Pronounced in open court on 18-12-2009.

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