2017 (9) TMI 277 - AT - Central Excise

Refund of unutilised CENVAT credit - export of goods - denial on the ground that finished goods attracted Nil rate of duty and also on the ground of time limitation - Held that - even though the finished goods attracted Nil rate of duty the refund in respect of input used in such goods is available under Rule 5 as per the judgment in case of Gujarat Ambuja Exports Ltd 2010 (12) TMI 323 - CESTAT, AHMEDABAD - Rule 6(6)(5) also provides that where the goods are exported the Cenvat credit is admissible. Therefore even the goods are not dutiable or attracted Nil rate of duty if it is exported, refund under Rule 5 is legally available to the assessee, therefore on this ground rejection of refund claim is not sustainable. Time limitation - Held that - filing the refund on quarterly basis is a procedural requirement and facility provided to the assessee that instead of one year appellant can file refund claim on quarterly basis - overall period of limitation for filing refund claim is one year as provided under Section 11B, therefore refund claim which is filed within one year, refund cannot be rejected on the ground that it was not filed on quarterly basis. Matter remanded to the adjudicating authority to pass a fresh order after verifying the other factual aspect - appeal allowed by way of remand.

Summary

Issues:
Refund claim rejection based on finished goods attracting Nil rate of duty, rejection due to non-filing on quarterly basis.

Analysis:
The case involves appeals against Orders-in-Appeal dated 13-1-2011 and 27-6-2011 where refund claims were rejected as finished goods attracted Nil rate of duty, hence no Cenvat credit was admissible. The Ld. Commissioner upheld the rejection citing Rule 5 of Cenvat Credit Rules. The appellants contended that the refund cannot be denied based on finished goods attracting Nil rate of duty, supported by judgments like Gujarat Ambuja Exports Ltd and Repro India Ltd. They argued that filing on a quarterly basis is a procedural requirement, not a ground for rejection, citing Section 11B for the one-year limitation. The Revenue reiterated the rejection, stating no Cenvat credit was available for goods with Nil duty rate. They relied on decisions like Suryamitra Exim Pvt Ltd and Ashu Organics Pvt Ltd.

Upon considering the submissions, the Member found that even if finished goods attracted Nil duty, refunds for inputs used were permissible under Rule 5, supported by judgments like Gujarat Ambuja Exports Ltd and Repro India Ltd. Rule 6(6)(5) also allowed Cenvat credit on exported goods, making the refund legally available. The Member referenced cases like Wellknown Polyster Ltd and Drish Shoes Ltd to support this view. Regarding the quarterly filing issue, it was clarified that while quarterly filing is a procedural benefit, the one-year limitation under Section 11B governs, as seen in Hotline Teletube & Components Ltd case. The Member distinguished the Revenue's relied-upon judgments based on decisions favoring the assessee by higher courts, like Sharp Menthol India Ltd upheld by the Supreme Court. Concluding that the lower authorities erred in rejecting the refund claim, the Member set aside the orders and remanded the matter for fresh consideration, directing the adjudicating authority to reevaluate the case in light of the observations.

This detailed analysis highlights the core arguments, legal principles, case laws, and the final decision rendered by the Appellate Tribunal CESTAT MUMBAI in the cited judgment.