2016 (10) TMI 185 - AT - Central Excise

100% EOU - Refund claim - Rule 5 of Cenvat Credit Rules, 2004 - accumulated credit on input services - whether the appellant s activity of converting blocks into slabs or tiles amounts to manufacture or not - appellants submitted that the process undertaken by the appellant amounts to manufacture in terms of Exim Policy, which has got wider notification than Section 2 (f) of the Central Excise Act, 1944 - Held that - The activity of the EOU should be decided based on the definition and scope as given in the Exim Policy when the same is different from Section 2 (f) of the Central Excise Act, 1944 and the refund of cenvat credit taken on inputs, where for the same reason, the same could not be utilized for clearing final products, refund under Rule 5 may be granted. Further, it is clear from the CBEC s circular that for the purpose of regulating the exemption to the EOU, the definition of manufacture as appearing in para 3.31 of the Exim Policy is relevant and not section 2 (f) of the Central Excise Act. Therefore, the impugned orders are not sustainable and are set aside. - Decided in favour of appellant

Summary

Issues:
Denial of refund claims under Rule 5 of Cenvat Credit Rules, 2004 for appellants operating as 100% EOU engaged in the manufacture of Stand Stone and Slate Articles.

Analysis:
The appeals were taken up together as the issue involved was identical, focusing on the denial of refund claims to the appellants under Rule 5 of Cenvat Credit Rules, 2004. The impugned orders denied the refund mainly on the grounds that the appellant's activity of converting blocks into slabs or tiles did not amount to manufacture, thus making them ineligible for the refund.

The main issue revolved around whether the process undertaken by the appellant amounted to manufacture and consequently, made them eligible for the refund of accumulated credit on input services as per Rule 5 of Cenvat Credit Rules, 2004. The appellant's counsel argued that the process should be considered as manufacture under the Exim Policy, which has a wider notification than Section 2(f) of the Central Excise Act, 1944. The counsel relied on previous cases to support this argument.

The Tribunal referred to previous decisions to support the appellant's claim. In cases like Keva Fragrances Pvt. Ltd. and Trimula Impex, it was held that the process undertaken by the appellant should be considered as manufacture based on the definition and scope provided in the Exim Policy, even if it differs from Section 2(f) of the Central Excise Act, 1944. The Tribunal also referred to a circular by the Board clarifying that a broader view should be taken in interpreting the exemption notification, emphasizing the relevance of the definition of "manufacture" as per the Exim Policy for EOUs.

After considering the arguments and analysis presented, the Tribunal found that the impugned orders denying the refund claims were not sustainable. Consequently, the orders were set aside, and the appeals were allowed with any consequential relief deemed necessary. The decision was pronounced on 31.08.2016.