2018 (4) TMI 216 - AT - Central Excise

Refund of unutilized CENVAT credit - inputs used in the manufacture of agricultural machinery parts have been entirely exported - Held that - the issue is squarely covered in favour of the appellant by the decision of the Hon ble High Court of Karnataka in the case of CCE Vs. ANZ International Ltd. 2009 (3) TMI 302 - KARNATAKA HIGH COURT wherein the Hon ble High Court has held that an EOU manufacturing exempt goods is entitled to take CENVAT Credit of duty paid on the inputs and can claim refund when such credit is unusable - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of refund claims for duty paid on steel scrap
- Eligibility for CENVAT credit on inputs utilized for manufacturing agricultural machinery parts
- Jurisdictional Assistant Commissioner's show-cause notices for rejecting refund claims
- Appellant's contention on the sustainability of the impugned order
- Time-barred demand in one appeal and duplication of demand in another

Analysis:
The judgment pertains to three appeals filed against a common impugned order rejecting refund claims for duty paid on steel scrap arising during the manufacturing of agricultural machinery parts. The appellant, engaged in this manufacturing process, sought CENVAT credit on inputs used, as the entire production was exported. The jurisdictional Assistant Commissioner issued show-cause notices proposing to reject the refund claims and recover the CENVAT credit, citing that the final product was chargeable to a 'nil' rate of duty. The appellant contended that the impugned order was unsustainable, emphasizing Rule 5 of CCR, 2004, and citing precedents supporting their refund claim eligibility. The appellant also argued that the goods exported were not exempt and should not be subject to domestic duty. Additionally, they highlighted the time-barred demand in one appeal and duplication of demand in another.

The judicial member, after considering submissions and precedents cited, found the issue to be squarely covered in favor of the appellant by the decision of the Hon'ble High Court of Karnataka in a specific case. The High Court had ruled that an EOU manufacturing exempt goods could claim CENVAT credit on duty paid inputs and seek a refund when such credit remained unused. The member also referenced a Tribunal case observing that the government's policy did not include exporting duties on exempted goods. Relying on these precedents, the impugned order was deemed unsustainable, and all three appeals of the appellant were allowed with any consequential reliefs. The judgment was pronounced on 07-02-2018.