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2022 (3) TMI 271 - AT - Central Excise100% EOU - Refund of CENVAT Credit - export of goods - denial of refund on the ground that there is no nexus between the goods exported and the credit for which the refund claim has been made - denial of CENVAT Credit on the ground that service which was paid by them on reverse charge basis was not payable as it was in respect of the services exported - payment of service tax by the provider of input services is doubted - inadmissibility of credit as duplicate copy of the invoice has not been produced - applicability of N/N. 27/2012-CE (NT) - HELD THAT - From the reading of Rule 5, it is providing for the refund of the accumulated CENVAT Credit in the books of account against the goods exported under Bond or letter of undertaking and the services exported. The basic principle which is being provided by the said Rule, is as per the avowed policy of the Government to reduce the prices of export so that they are internationally competitive. It is also imperative to note that no country will like to export the taxes leviable locally along with the goods and services exported. To accomplish this Government has provided for various schemes to zero rate the goods and services exported. From the reading of the provisions of Rule 14 it is quite evident that if for a moment it is accepted that certain credit were wrongly or erroneously taken by the appellant contrary to the provisions contained in Rule 3 and 4 of the said Rules, then the same could have been denied by following the procedure as laid down in Rule 14. The so availed erroneous credit cannot be the subject matter of proceedings of Refund in terms of Rule 5 of the CENVAT Credit Rules, 2004 - Admittedly and undisputedly no proceedings for denial of any CENVAT Credit as claimed by the appellants, for encashment of which they have filed these refund claims have been initiated by the revenue. Without denying the CENVAT Credit taken/ availed by the appellant in their book of accounts during the relevant period (quarter) by way of initiating proceedings against the appellant in terms of Rule 14, revenue could not have altered the quantum of Net CENVAT Credit availed during the said quarter, and deny the encashment of that amount of the CENVAT Credit which is due as per the Rule 5. It is now well settled principle of law that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner. There are no merits in the impugned order - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Refund claims under Rule 5 of the CENVAT Credit Rules, 2004. 2. Nexus between goods exported and credit claimed. 3. Admissibility of credit for services paid on reverse charge. 4. Requirement of producing duplicate copy of the invoice. 5. Interpretation of Rule 5 and Notification No 27/2012-CE (NT). Issue-wise Detailed Analysis: 1. Refund claims under Rule 5 of the CENVAT Credit Rules, 2004: The appellant, a 100% Export Oriented Unit, filed five refund claims under Rule 5 of the CENVAT Credit Rules, 2004, for the accumulated CENVAT Credit attributable to the goods exported. The claims were either partly allowed or rejected by the jurisdictional authorities and the Commissioner (Appeals). The appellant contended that the objective of Rule 5 is to refund the accumulated input credits so that exports are zero-rated, as per Circular No 120/01/2010 dated 19/01/2010. The Tribunal agreed with the appellant, emphasizing that Rule 5 provides for the refund of accumulated CENVAT Credit against goods and services exported, aligning with the government's policy to zero-rate exports. 2. Nexus between goods exported and credit claimed: The appellant argued that there is no requirement to establish a direct nexus between the goods exported and the credit for which the refund claim has been made under Rule 5. The Tribunal supported this view, citing several decisions, including Fabrimax Engineering Pvt Ltd and Ravi Foods Ltd, which held that there is no such requirement in law. The Tribunal concluded that the refund claims should not be denied on the ground of lack of nexus between the goods exported and the credit claimed. 3. Admissibility of credit for services paid on reverse charge: The appellant claimed that the service tax paid by them on a reverse charge basis was not payable as it was in respect of services exported, and hence the CENVAT Credit was not admissible. The Tribunal referred to the decision in Aarvee Denims & Exporters Ltd, which stated that there is no requirement for the appellant to prove the payment of service tax by the service provider for claiming the refund under Rule 5. Therefore, the Tribunal found the rejection of the refund claims on this ground to be incorrect. 4. Requirement of producing duplicate copy of the invoice: The appellant's refund claims were partly rejected on the ground that the duplicate copy of the invoice was not produced. The Tribunal noted that Rule 14 of the CENVAT Credit Rules, 2004, provides the procedure for recovery of CENVAT Credit wrongly taken or erroneously refunded. The Tribunal emphasized that without initiating proceedings under Rule 14, the revenue could not alter the quantum of "Net CENVAT Credit" availed during the said quarter and deny the refund claim. The Tribunal found that the rejection of the refund claims on this ground was not justified. 5. Interpretation of Rule 5 and Notification No 27/2012-CE (NT): The revenue argued that Rule 5, read with Notification No 27/2012-CE (NT), mandates the filing of only one refund claim per quarter. The Tribunal, however, found that the appellant had not submitted more than one refund claim for any quarter, as evident from the records. The Tribunal emphasized that the term "quarter" has been used concerning the exports made and not the CENVAT Credit taken. The Tribunal concluded that the appellant's interpretation of Rule 5 and the notification was correct. Conclusion: The Tribunal set aside the impugned orders and allowed all five appeals, emphasizing that the refund claims under Rule 5 of the CENVAT Credit Rules, 2004, should be granted as per the law and the government's policy to zero-rate exports. The Tribunal reiterated that the denial of refund claims without initiating proceedings under Rule 14 was not justified, and there is no requirement to establish a direct nexus between the goods exported and the credit claimed.
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