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2019 (9) TMI 1106 - AT - Central ExciseRefund of CENVAT Credit - Rule 5 of CCR, 2004 - Duty drawback claimed for export goods - Department s case is that no refund of credit should be allowed to the manufacturer if any drawback whatsoever is claimed in respect of the goods which are exported and therefore the first appellate authority has erred in sanctioning refund under Rule 5 - HELD THAT - A plain reading of the proviso to Rule 5 shows that refund of credit shall not be allowed only if drawback has been availed in respect of such duty. Such duty in this case refers only to the excise duty because there is no mechanism of granting Cenvat credit of the basic customs duty. In this case, since the drawback scheme itself has provided for a single rate of drawback, which, according to the clarification in the Notification 110/2015-CUS dated 16.11.2015, means only customs duty drawback, it is impossible that the respondents could have availed drawback of central excise duty. Therefore, there is no prohibition in refund of Cenvat credit on inputs or input services in respect of the goods which are exported. Refund allowed - Appeal dismissed - decided against Revenue.
Issues:
- Stay applications for impugned orders - Eligibility of refund of Cenvat credit under Rule 5 of CCR, 2004 Stay Applications for Impugned Orders: The Tribunal dismissed three stay applications filed by the department against impugned Orders-in-Appeal, stating that the power of stay is limited to staying the recovery of pre-deposit. The Tribunal found the stay applications not maintainable as the amount of pre-deposit has been fixed by statute, leading to the dismissal of all three applications. The Tribunal proceeded to consider the main issue at hand after dismissing the stay applications. Eligibility of Refund of Cenvat Credit under Rule 5 of CCR, 2004: The case revolved around the eligibility of the respondents for a refund of Cenvat credit under Rule 5 of CCR, 2004. The respondents had filed refund claims under the rule, which were rejected by the lower authority on the grounds that they had availed drawback under the Customs, Central Excise Duties & Service Tax Drawback Rules, 1995. The first appellate authority allowed the appeals, leading to the orders in dispute. The key point was whether the respondents were entitled to the refund of Cenvat credit under Rule 5. The Tribunal analyzed Rule 5 and the first proviso, which prohibits refund if the manufacturer avails drawback under the 1995 Rules. The lower authority believed the respondents were not entitled to the refund due to availing drawback, while the first appellate authority noted that the respondents had not availed Cenvat credit or rebate of duty under Central Excise duty, only drawback of Customs duty. This distinction led to the first appellate authority allowing the refund of Cenvat credit. The Tribunal delved into the scheme of drawback, explaining its purpose as a refund mechanism for exported goods. It clarified that the drawback consists of customs and Central Excise portions, with a single rate indicating only customs duty drawback. Since the schedule provided a single rate for the goods exported by the respondents, the entire rate was considered attributable to customs duty only, precluding availing of central excise duty drawback. The department contended that no refund should be allowed if any drawback is claimed for exported goods, but the Tribunal interpreted the proviso to Rule 5 to apply only if drawback has been availed specifically for excise duty. Given the clarification on the single rate in the drawback schedule, the Tribunal concluded that the respondents had not availed central excise duty drawback and were eligible for the refund of Cenvat credit under Rule 5. In the final analysis, the Tribunal upheld the impugned orders, dismissing the appeals filed by the revenue. The decision affirmed the eligibility of the respondents for the refund of Cenvat credit under Rule 5 of CCR, 2004, based on the interpretation of the drawback scheme and the specific provisions of the rule.
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