2017 (4) TMI 330 - AT - Central Excise

100% EOU - Refund claim - rejection on the ground that goods supplied against advance authorization to the domestic market - Held that - Rule 5 refund provides for refund of unutilized accumulated Cenvat credit against exports of goods, Rule 5 does not discriminate between physical exports out of India and deemed exports supplies made within Indian territory therefore in absence of such discrimination, it cannot be said that Rule 5 refund is applicable only for exports of goods out of India and not for deemed exports supplies in India - deemed exports supplies are also eligible for refund u/r 5 - appeal dismissed - decided against Revenue.

Summary

Issues:
Refund of unutilized Cenvat credit under Rule 5 for deemed exports made to 100% EOU.

Analysis:
The respondent, a 100% EOU, filed a refund claim for unutilized Cenvat credit on inputs and services under Rule 5 of the Cenvat Credit Rules, 2004. The Adjudicating authority allowed a refund of &8377; 15,80,341/- but disallowed &8377; 1,03,341/- due to invalid documents and rejected a refund of &8377; 8,78,717/- for goods cleared to a domestic party against advance authorization. The Commissioner(Appeals) held that supplies made against advance authorization are deemed exports and thus eligible for Rule 5 refund. The Revenue challenged this decision.

The Revenue argued that Rule 5 only provides refunds for goods exported out of India, not for deemed exports within India. They cited various judgments to support their position. On the other hand, the respondent contended that Rule 5 refunds are applicable even for deemed exports, citing legal authorities and judgments in their favor.

The Tribunal analyzed the legal provisions, notifications, export-import policies, and previous judgments. It agreed with the Commissioner(Appeals) that Rule 5 refunds cover deemed exports as well. The Tribunal emphasized that Rule 5 does not differentiate between physical exports and deemed exports, citing precedents and the Gujarat High Court's decision equating deemed exports to physical exports. The Tribunal distinguished a previous Tribunal decision and upheld the Commissioner(Appeals)'s ruling.

The Tribunal concluded that refunds under Rule 5 are admissible for clearances made to 100% EOU, treating them as exports. Deemed exports to EOUs are eligible for Rule 5 refunds, as settled by various judgments and high court decisions. The Tribunal dismissed the Revenue's appeals, upholding the Commissioner(Appeals)'s decision. The judgment establishes that deemed exports are eligible for Rule 5 refunds, aligning with legal precedents and the Gujarat High Court's decision.