2013 (4) TMI 526 - AT - Service Tax

Refund claim of Cenvat Credit in respect of unutilized Cenvat Credit of duty/service tax paid on input/input service used in export of final product - period 01.10.2009 to 31.03.2010 denied - The respondent claimed refund of accumulated CENVAT Credit Rule 5 of the CENVAT Credit Rules, 2004 - whether such supply of goods to SEZ units was an export - Held that - The definition of export given under the Customs Act has been traditionally adopted for purposes for the Central Excise Act and the Rules thereunder. Therefore, in the absence of a definition of export under the Central Excise Act, the Central Excise Rules or the CENVAT Credit Rules, 2004, thus for purposes of the CENVAT Credit Rules, 2004, one should look for its definition given under the Customs Act. The fictionalized definition of export under Section 2 (m) (ii) of the SEZ Act cannot be looked for as it purports only to make the SEZ unit an exporter. The term export used in Rule 5 of the CENVAT Credit Rules, 2004 stands for export, which is physical export out of the country, envisaged under the Customs Act. Thus taking this view because, as already indicated, anybody other than SEZ unit cannot be allowed to claim any benefit under the SEZ Act/Rules. Viewed from this angle, the respondent cannot be held to be entitled to refund of accumulated CENVET Credit on the inputs used in our in relation to the manufacture of the Pre-fabricated buildings supplied by them to the SEZ units. Thus the supplies made to SEZ cannot be treated as export for the purpose of Rule 5 of the Cenvat Credit Rules and accordingly appellant is not entitled to refund of Cenvat Credit in respect of inputs/inputs services used in the manufacture of final products supplied to SEZ unit.

Summary

Issues:
Eligibility of refund under Rule 5 of the Cenvat Credit Rules for inputs used in final products supplied to SEZ.

Analysis:
The appeal was filed by M/s Everest Industries Ltd. against the rejection of their refund claim of Cenvat Credit amounting to Rs. 12,87,520. The appellant's final products were fully exempt under a specific notification, making them ineligible to avail Cenvat Credit or claim a refund under Rule 5 of the Cenvat Credit Rules. The Deputy Commissioner and the Commissioner (Appeal) had both rejected the appellant's claims, leading to this appeal.

The appellant argued that since they supplied goods to SEZ without duty payment, Rule 6(6)(i) of the Cenvat Credit Rules should apply, making them eligible for a refund. They also contended that even if their final products were exempted, they could still claim a refund under Rule 18 of the Central Excise Rule. On the other hand, the Revenue representative stated that once goods are exempted from Central Excise duty, Cenvat Credit cannot be availed under Rule 6(1), thus negating the possibility of a refund under Rule 5.

The central issue revolved around the interpretation of Rule 5 of the Cenvat Credit Rules, which allows for a refund of Cenvat Credit used in the manufacture of final products cleared for export. The Tribunal referenced a previous case to determine whether supplies to SEZ could be considered as exports. The Tribunal clarified that for the purposes of the Cenvat Credit Rules, the term "export" should align with the definition under the Customs Act, emphasizing physical export out of the country. Consequently, the Tribunal concluded that supplies to SEZ cannot be treated as exports under Rule 5, thereby denying the appellant's entitlement to a refund for inputs used in final products supplied to SEZ units.

In light of the above analysis, the appeal was rejected by the Tribunal, upholding the decision that the appellant was not eligible for a refund of Cenvat Credit for inputs used in final products supplied to SEZ units.