2010 (2) TMI 538 - AT - Customs

Refund of unutilized Cenvat credit - refund claims were rejected by the Original Adjudicating Authority on the ground that - restriction is applicable only in respect of Cenvat credit claimed as refund and is not applicable to terminal excise duty paid as drawback by under Foreign Trade Policy Held that - refund of Cenvat credit which could not be utilized.

Summary

Issues:
Refund of unutilized Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004; Entitlement to drawback under Foreign Trade Policy handbook of procedure; Interpretation of Proviso to Rule 5 of Cenvat Credit Rules, 2004; Verification of original documents for refund claims.

Analysis:
The case involved a dispute regarding the rejection of three refund claims for unutilized Cenvat credit by the Original Adjudicating Authority, which were later allowed by the Commissioner (Appeals) subject to the production of relevant original documents. The Revenue appealed against this decision, arguing that the respondents were entitled to drawback under the Foreign Trade Policy handbook of procedure and thus the refund claims should have been rejected. The Revenue contended that the Commissioner erred in accepting proof of export as sufficient evidence and highlighted discrepancies in the certification of input consumption by a Chartered Accountant.

The respondents, on the other hand, argued that the Proviso to Rule 5 of Cenvat Credit Rules, 2004, restricted refund only in cases where drawback was claimed under specific rules, not under the Foreign Trade Policy. They also pointed out a CBEC Circular supporting their position, emphasizing that the restriction applied to Cenvat credit claimed as refund. The respondents further highlighted that the Original Adjudicating Authority had verified the original documents post-appeal and correctly sanctioned the refund.

Upon considering the arguments, the Tribunal found no merit in the Revenue's appeal. It clarified that the Proviso to Rule 5 applied to Cenvat credit claimed as refund, not to terminal excise duty paid as drawback under the Foreign Trade Policy. The Tribunal also referenced the CBEC Circular, supporting the respondents' entitlement to the refund. Additionally, the Tribunal noted that the Original Adjudicating Authority had verified the Chartered Accountant certificate and other relevant documents before sanctioning the refund, rendering the objections raised irrelevant. Therefore, the Tribunal rejected the Revenue's appeal, affirming the respondents' entitlement to the refund of unutilized Cenvat credit as per the Cenvat Credit Rules and the Board's Circular.

This comprehensive analysis of the judgment delves into the key issues raised, the arguments presented by both parties, and the Tribunal's detailed reasoning leading to the final decision, ensuring a thorough understanding of the legal aspects involved in the case.