2015 (10) TMI 106 - AT - Central Excise

Refund claim of unutilized credit towards export of goods - Sanction of partial claim and denial of input credit involved relates to physical stock of raw material - Rule 5 of CENVAT Credit Rules, 2002 read with Notification No. 11/2002-CX dated 1.3.2002 - Held that - closing balance of CENVAT credit as on the relevant date includes the input credit on the physical stock of raw material and finished goods lying in stock on the relevant date. After excluding the credit on inputs lying in stock and the input contained in finished goods in stock the adjudicating authority has correctly arrived the balance amount as ₹ 14,09,814/-. Rule 5 of CENVAT Credit Rules stipulates that where exporter can claim refund only when they are not able to use the accumulated credit for payment of domestic clearance. As seen from the above, the input credit is attributable to the goods already exported during the relevant quarter has been correctly worked out to ₹ 14,09,814/-. The amount excluded is the input credit involved in the physical stock of raw materials lying in stock as on 31.3.2002. Therefore, the original authority has correctly sanctioned the refund - Decided against assessee.

Summary

Issues:
Claim of refund of unutilized credit under Rule 5 of CENVAT Credit Rules, 2001.

Analysis:
The appellant filed an appeal against an Order-in-Appeal regarding a refund claim of Rs. 24,35,313 for the quarter ending March 2002. The adjudicating authority sanctioned a refund of Rs. 14,09,814 and rejected the balance due to the input credit involving physical stock of raw material as of March 31, 2002. The Commissioner (Appeals) upheld this decision.

The appellant contended that as exporters, they were entitled to the entire refund as the credit accumulated from inputs used in finished goods exported. They cited relevant case laws to support their argument. On the contrary, the Revenue's representative supported the lower authorities' findings and mentioned a previous Tribunal order rejecting a similar refund claim by the appellant.

The Tribunal examined the records and noted that the adjudicating authority had correctly sanctioned the refund by considering unutilized credit from inputs used in exported finished goods. The Tribunal highlighted the importance of Rule 5 of CENVAT Credit Rules, which allows exporters to claim refunds if they cannot use accumulated credit for domestic clearances. The Tribunal agreed with the exclusion of input credit related to physical stock of raw materials in determining the refund amount.

Ultimately, the Tribunal found no merit in the appellant's appeal, upholding the impugned order and dismissing the appeal based on previous Tribunal decisions and the correct application of Rule 5 in determining the refund amount. The case laws cited by the appellant were deemed irrelevant to the present case, reinforcing the decision to uphold the lower authorities' rulings.