2018 (2) TMI 1560 - AT - Central Excise

100% EOU - Refund of unutilized CENVAT credit - Rule 5 of the CCR 2004 - denial for the reason that the claims have been filed beyond the period of one year prescribed in Section 11B of the CEA 1944 - Held that - Even though the notification has made Section 11B applicable the refund in terms of Rule 5 is different from a claim for rebate on duty paid on excisable goods exported out of India - Refund under Rule 5 is for refund of Cenvat credit accumulated due to export of goods under bond. This refund depends not only upon the accumulated Cenvat credit due to exports but also the inability of the manufacturer to use it for payment of duty of domestic clearances. It has been held by the Honorable High Court of Karnataka in the case of mPortal India Wireless Solutions P. Ltd. vs. CST Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT that the limitations under Section 11B does not apply for refund of accumulation of Cenvat credit. The appellants will be eligible for refund as claimed by them if otherwise eligible without being hit by the limitations under Section 11B - appeal allowed - decided in favor of appellant.

Summary

Issues: Refund of unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 rejected on grounds of time bar.

Analysis:

1. Background of the Case: The appeals were filed against Orders-in-Appeal rejecting refund claims of unutilized Cenvat credit by two 100% E.O.U.s engaged in manufacturing and exporting natural slate and sandstone. The claims were rejected for being filed beyond the one-year period prescribed in Section 11B of the Central Excise Act, 1944.

2. Arguments by Appellant: The advocate for the appellants argued that the limitation under Section 11B does not apply to refund of accumulated Cenvat credit. Citing case laws like mPortal India Wireless Solutions P. Ltd. vs. CST, Bangalore, Deepak Spinners Ltd. vs. CCE, Indore, and Commissioner of C. Ex. & Customs, Surat-I vs. Swagat Synthetics, it was contended that the time bar does not apply to such refund claims.

3. Revenue's Justification: The Revenue justified the rejection of refund claims on the grounds of time bar, referring to the procedure outlined in Notification No. 11/2002-C.E. (N.T.) which made the time limit under Section 11B applicable to such claims.

4. Tribunal's Decision: The Tribunal observed that the procedure for seeking cash refund under Rule 5 is different from a claim for rebate on duty paid on exported goods. It noted that the refund under Rule 5 depends on accumulated Cenvat credit due to exports and the manufacturer's inability to use it for domestic clearances. Citing the case of mPortal India Wireless Solutions P. Ltd. vs. CST, Bangalore, the Tribunal held that limitations under Section 11B do not apply to refund of accumulated Cenvat credit.

5. Legal Precedents: The Tribunal referred to the decisions of the High Courts in the cases mentioned earlier, emphasizing that the limitations under Section 11B do not apply to refund of accumulated Cenvat credit. Based on this reasoning, the Tribunal set aside the impugned orders and allowed the appeals, concluding that the appellants were eligible for the refund claimed without being restricted by the time bar under Section 11B.

In conclusion, the Tribunal's judgment clarified that the time bar under Section 11B does not apply to refund claims of accumulated Cenvat credit under Rule 5, as supported by legal precedents and the specific nature of such refunds.