2016 (6) TMI 674 - AT - Central Excise

Cenvat Credit refund - Assistant Commissioner had sanctioned credit on the ground that respondent was unable to utilize the said credit on account of duty free clearance made by it to an EOU against CT-3 - Held that - Clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004. See Apotex Pharachem (I) Pvt. Ltd., Bangalore vs. C.C.E., Bangalore 2015 (10) TMI 2353 - CESTAT BANGALORE - Refund cannot be denied.

Summary

Issues:
1. Eligibility for Cenvat Credit refund under Rule 5 of the Cenvat Credit Rules, 2002.
2. Interpretation of the term "export" in the context of deemed exports to 100% Export Oriented Units (EOUs).

Analysis:
Issue 1:
The appeal before the Appellate Tribunal CESTAT New Delhi involved a challenge by the Revenue against an Order-in-Appeal that upheld the Order-in-Original sanctioning a Cenvat Credit refund under Rule 5 of the Cenvat Credit Rules, 2002. The Revenue contended that the respondent's supply of goods to a 100% EOU did not qualify as an export, making the refund inadmissible. The Tribunal considered the arguments presented by both sides and referred to the judgment of the Hon'ble Gujarat High Court in a similar case to support its decision.

Issue 2:
The Tribunal referenced the case of Apotex Pharachem (I) Pvt. Ltd. vs. C.C.E., Bangalore and the judgment of the Gujarat High Court in C.C.E., Surat vs. Shilpa Copper Wire Industries to address the interpretation of the term "export" concerning deemed exports to 100% EOUs. The Tribunal highlighted that the Gujarat High Court had ruled that clearances made by one 100% EOU to another, deemed as exports, should be treated as physical exports for the purpose of refunding unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. This legal precedent established that such transactions were eligible for Cenvat Credit refunds, settling the issue in favor of the respondent in the present case. The Tribunal emphasized that in cases of conflicting judgments, the decision of a Division Bench, as in the Gujarat High Court case, held precedence over that of a Single Bench, reinforcing the validity of the ruling.

In conclusion, the Appellate Tribunal CESTAT New Delhi dismissed the Revenue's appeal, upholding the lower authorities' decision to grant the Cenvat Credit refund to the respondent based on the settled legal interpretation that transactions with 100% EOUs deemed as exports qualified for such refunds under Rule 5 of the Cenvat Credit Rules.