2017 (5) TMI 620 - AT - Central Excise

100% EOU - Refund claim towards input services submitted on the basis of Invoices only without availing the credit first - Rule 5 of the CCR, 2004 - denial of refund on the ground that no CENVAT credit taken on input services by appellant - Held that - for refund claim u/r 5 of the CCR, 2004, firstly, the assessee is required to take cenvat credit and the said cenvat credit if remained un-utilise, in that circumstances, the assessee can file refund claim u/r 5 of the CCR, 2004 - the appellant has not taken cenvat credit on input service in question at all and no credit was shown in their regular ER-2 returns - provisions of Rule 5 of the CCR, 2004 are not applicable - refund rightly denied - appeal dismissed - decided against assessee.

Summary

Issues:
Refund claim rejection under Rule 5 of Cenvat Credit Rules, 2004 for an EOU manufacturing exempted goods.

Analysis:
The appellant, a 100% EOU manufacturing Cellular Phones, filed a refund claim for input services used in manufacturing final products amounting to ?99,64,860. The claim was rejected by the adjudicating authority, and subsequent appeals to the Ld. Commissioner (A) resulted in a reduced refund of ?20,54,543, which was also rejected. The appellant contended that as per Rule 6(6) of the Cenvat Credit Rules, 2004, they were entitled to the refund claim under Rule 5. The appellant cited various court decisions to support their argument.

The Ld. AR opposed the appellant's contention, stating that as the appellant had not taken cenvat credit on input services for manufacturing exempted goods, the refund claim under Rule 5 could not be entertained. The appellant, in rebuttal, argued that they filed the refund claim on invoices showing cenvat credit, despite believing they were manufacturing exempted goods.

Upon consideration of Rule 5 of the Cenvat Credit Rules, 2004, it was noted that for a refund claim, the assessee must have taken cenvat credit, which was not done by the appellant in this case. The Tribunal found that the appellant had not taken any cenvat credit on the input services in question, making Rule 5 inapplicable. The Tribunal distinguished the cited court cases, noting that they were not relevant to the present case as they involved different factual circumstances, including the taking of cenvat credit.

Since the appellant did not take cenvat credit on the input services and no credit was reflected in their ER-2 returns, the Tribunal upheld the impugned order rejecting the refund claim. Consequently, the appeal was dismissed.