2014 (7) TMI 611 - AT - Central Excise

Refund claim - clearances made to advance authorization holders - whether consititute export - refund of accumulated credit can be refunded under Rule 5 of CENVAT Credit Rules (CCR), 2004 - deemed export versus physical export - Held that - apparently case laws relied upon by the revenue are not applicable as distinguishable from the facts of the present case - Revenue has not been able to make out a prima facie case for stay against the sanction of refund to the respondent - there will be no stay on refund.

Summary

Issues:
- Appeal against refund allowed to 100% EOU for clearances to advance authorization holders.
- Whether clearances to advance authorization holders can be considered as exports for refund under Rule 5 of CCR, 2004.
- Interpretation of provisions of Rule 5 of CCR and Notification No.5/2006.
- Application of decisions in Bombay Dyeing & Manufacturing Company Ltd. and M/s. Bansal Metallic Oxides.
- Consideration of deemed exports for refund under Rule 5 of CCR.

Analysis:
The judgment involves an appeal by the Revenue against the refund allowed to a 100% EOU for clearances made to advance authorization holders. The Revenue contended that such clearances cannot be considered exports for refund under Rule 5 of CCR, 2004, as there was no physical export involved. The Commissioner (A) partially allowed the refund claimed by the appellant, considering the clearances as deemed exports. The Commissioner analyzed Rule 5 of CCR along with Notification No.5/2006, highlighting that the refund is applicable for inputs used in the manufacture of final products cleared for export under bond or letter of undertaking. The Commissioner noted that the clearances were made against B-17 and ARE-1s to advance authorization holders, and the goods were removed under these bonds. It was observed that the advance authorization holders utilized the goods for the intended purpose. The Commissioner referred to various decisions supporting the inclusion of deemed exports for refund under Rule 5 of CCR, which were upheld by High Courts.

The judgment also addressed the decisions cited by the Revenue's authorized representative. In the case of Bombay Dyeing, it was held that refund is admissible only for inputs used in the manufacture of exported goods. Since there was no claim that the advance authorization holders did not use the goods as required, this decision was deemed inapplicable. Regarding M/s. Bansal Metallic Oxides, the issue was whether deemed exports' value could be included in the total value of clearances under a specific notification. The judgment found that applying this decision to the present case would necessitate a detailed examination of relevant provisions, which was deemed unnecessary at that stage. The applications for stay against the refund sanction were rejected as the Revenue failed to establish a prima facie case against the refund to the respondent.

In conclusion, the Tribunal upheld the refund allowed to the appellant, considering the clearances to advance authorization holders as deemed exports eligible for refund under Rule 5 of CCR, in line with established decisions and legal interpretations.