2012 (12) TMI 431 - AT - Central Excise

Cash refund - accumulated Cenvat credit goods supplied to other 100% EOUs or supplied to DMRC by availing full duty exemption under Notification No. 6/2006-C.E. Held that - Cash refund of accumulated Cenvat credit is subject to condition that the manufacturer/provider of output service does not avail the input duty drawback or input duty rebate - Rule 5 is applicable only in respect of the use of Cenvat credit availed inputs or input services for manufacture of the goods which are cleared for export under bond/letter of undertaking or are used in the manufacture of intermediate product cleared for export - supplies to SEZ are to be treated as export for the purpose of this Rule in terms of the provisions of Section 2(m) of SEZ Act, 2005, the supplies to DMRC by availing Notification No. 6/2006-C.E. which though deemed exports in terms of the provisions of EXIM policy, cannot be treated as export for the purpose of Rule 5 of Cenvat Credit Rules, 2004 - provisions of this Rule are not applicable in respect of accumulated Cenvat credit on account of supplies to DMRC by availing full duty exemption under Notification No. 6/2006-C.E. - no evidence that the goods have been used by those EOUs in manufacture of finished product which were exported out of India under bond - appeal is dismissed.

Summary

Issues Involved:
Cash refund of accumulated Cenvat credit in respect of supplies to 100% EOUs and DMRC under Notification No. 6/2006-C.E.

Analysis:
The appellant manufactured custom-built switchgear and panels chargeable to Central Excise duty under specific sub-headings. They availed Cenvat credit of Central Excise duty paid on inputs, capital goods, and service tax paid on input services under the Cenvat Credit Rules, 2004. The dispute pertained to the period of 2008-2009. The appellant supplied goods not only domestically but also to SEZs, 100% EOUs, and DMRC under an exemption notification. They sought cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The Jurisdictional Assistant Commissioner allowed the refund for SEZ supplies but disallowed it for other 100% EOUs and DMRC supplies. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

The main issue revolved around whether cash refund of accumulated Cenvat credit for inputs/input services used in goods supplied to 100% EOUs and DMRC under Notification No. 6/2006-C.E. was permissible under Rule 5 of the Cenvat Credit Rules. Rule 5 allows Cenvat credit utilization for goods cleared for export under bond or used in the manufacture of intermediate products cleared for export. While supplies to SEZs qualify as exports under SEZ Act, 2005, supplies to DMRC under the exemption notification, though deemed exports, do not meet the export criteria under Rule 5. Therefore, the Rule does not apply to DMRC supplies. Additionally, there was no evidence that the EOUs used the goods in the manufacture of products exported under bond, rendering them ineligible for cash refund.

After considering the arguments and examining the records, the Tribunal concluded that the provisions of Rule 5 did not apply to accumulated Cenvat credit from supplies to DMRC under the exemption notification or to supplies to 100% EOUs lacking evidence of export under bond. Consequently, the impugned order was upheld, and the appeal for cash refund was dismissed.