2014 (2) TMI 107 - AT - Central Excise

Allowability of refund of Cenvat credit availed on inputs used in the manufacture of goods cleared by DTA unit to a 100% Export Oriented Unit - Held that - clearances were affected by the appellant to EOUs on CT-3 and ARE-1/ARE-3 certificates. Since the clearances are made to EOU, appellant was unable to utilise the cenvat credit which were lying in the balance with them - Following decision of case in NBM Industries 2011 (9) TMI 360 - GUJARAT HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Refund of cenvat credit for goods cleared to 100% EOU without payment of duty on certificates.

Analysis:
The judgment concerns the issue of refund of cenvat credit availed on inputs used for manufacturing goods cleared to 100% Export Oriented Units (EOU) without payment of duty on certificates. The appellant cleared goods to EOUs on CT-3 and ARE-1/ARE-3 certificates, rendering them unable to utilize the cenvat credit. The judgment references a similar case before the Hon'ble High Court of Gujarat involving the entitlement of a manufacturer to refund cenvat credit on inputs used for goods cleared by DTA units to 100% EOU. The Revenue contended that Rule 5 of the Cenvat Credit Rules did not cover such situations for deemed export, insisting that only physical exports qualified for refund. The judgment cites a Division Bench decision that deemed exports to 100% EOUs should be treated as physical exports for refund purposes under Rule 5. The judgment also notes a contradictory view by the Madras High Court, but it upholds the Gujarat High Court's decision as binding. Consequently, the bench sets aside the impugned order and allows the appeal based on the precedent established by the Hon'ble High Court of Gujarat.

In conclusion, the judgment resolves the issue by aligning with the precedent set by the Hon'ble High Court of Gujarat, emphasizing that deemed exports to 100% EOUs should be treated as physical exports for cenvat credit refund purposes under Rule 5. The decision highlights the consistency in legal interpretation across different cases and dismisses the Revenue's appeal, affirming the entitlement to refund in the specific context of goods cleared to EOUs. The judgment underscores the importance of following established legal principles and upholding decisions that provide clarity on complex matters related to cenvat credit refunds for deemed exports to EOUs.