2022 (12) TMI 720 - AT - Central Excise

Refund of un-utilized Cenvat Credit of Input Services used in or in relation to the manufacture of export goods - it is alleged that Appellant have taken double benefit in as much as they have taken refund of Rs. 45,35,610/- and they did not debit/reverse the said amount from Cenvat account - HELD THAT - Originally when the appellant filed the refund claim under Notification No. 5/2006, the same was allowed by refund sanctioning authority. The revenue has challenged the sanction of refund claim on the ground that as per Notification No. 27/2012-CE (NT) dated 18.06.2012, which is issued in suppression of Notification No. 5/2006-CE(NT) dated 14.03.2006, the amount that is claimed as refund under Rule 5 of the Cenvat Credit Rules shall be debited by the claimant from his cenvat credit account at the time of making the claim . In the impugned orders the Commissioner (Appeals) has wrongly considered the claim under Notification No. 27/2012 instead of Notification No. 5/2006. The reliance made upon the provisions of Notification No. 27/2012- CE (NT) dated 18.06.2012 is absurd and illegal since the refund claim was admittedly filed in the present matter under the provisions of Notification No. 5/2006-CE (NT) dated 14.03.2006. it is pertinent to note that under Notification No. 5/2006, the requirement for debiting the refund claim amount did not exist. It is found from the refund order that all the claims were sent to Range offices for verification and the same have been duly verified by the Range officers. The charge of double benefit made by the revenue is absolutely incorrect on the face of the records in as much as the appellant even though did not carry forward and debit the refund amount in their cenvat account. However it is the case of the revenue that such cenvat credit was never utilised. The non transfer of unutilised cenvat credit is as good as reversal of cenvat. The charge of the double benefit will sustain only when the assessee in one hand claim the refund and in other hand utilise the same amount for payment of duty on their clearance of goods, which is no-body's case. Hence the allegation of double benefit of the same amount does not even exists. In this undisputed fact, the Learned Commissioner (Appeals) has erred in rejecting the appellant's claim for refund. Interest on delayed refund - HELD THAT - The issue has been settled by various decisions. Hence by following the ratio of the decisions, mainly RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT wherein the Hon'ble Supreme Court has held that interest on delayed refund is payable under Section 11BB of Central Excise Act, 1944 on the expiry of period of three months from the date of receipt of application under Section 11B(1) ibid - the appellant is entitled for the interest as per the Apex Court decision in Ranbaxy Laboratories Ltd. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Orders-In-Appeal, Refund claims under Cenvat Credit Rules, Double benefit allegation, Retrospective effect of Notification No. 27/2012-CE (NT), Transfer of credit from EOU to DTA unit, Interest on delayed refund.

Analysis:
1. Refund Claims under Cenvat Credit Rules:
The appellant, an EOU unit, filed 18 refund claims under Rule 5 of Cenvat Credit Rules, 2004 for unutilized Cenvat Credit of Input Services used in manufacturing export goods. After debonding, the appellant did not carry forward the credit but showed it as Refund Receivable. The jurisdictional Assistant Commissioner sanctioned the refund. The revenue alleged double benefit as the credit was not debited from the Cenvat account. However, the Tribunal found that the appellant fulfilled conditions under the Rules and Notification No. 5/2006-CE (NT), rejecting the revenue's claim of double benefit.

2. Retrospective Effect of Notification No. 27/2012-CE (NT):
The appellant argued that the retrospective application of Notification No. 27/2012-CE (NT) on refund claims filed under Notification No. 5/2006-CE (NT) was incorrect. The Tribunal agreed, stating that the appellant cannot be asked to comply with a later notification when the refund claims were filed earlier. The Tribunal emphasized that the conditions under the relevant notification at the time of filing the claim must be considered.

3. Transfer of Credit from EOU to DTA Unit:
The appellant was issued a protective show cause notice regarding the transfer of credit from the EOU to DTA unit. The Tribunal noted that the appellant did not carry over the credit to the DTA unit's Cenvat Credit register but showed it as "Modvat credit refund receivable" in financial accounts. The Tribunal found that the non-transfer of unutilized credit did not amount to double benefit as alleged by the revenue.

4. Interest on Delayed Refund:
The appellant claimed interest on delayed refund, citing various decisions. The Tribunal referred to the decision in Ranbaxy Laboratories Ltd., holding that interest is payable under Section 11BB of the Central Excise Act, 1944, after three months from the application date. The Tribunal upheld the appellant's entitlement to interest on delayed refund based on the Supreme Court decision.

In conclusion, the Tribunal set aside the impugned orders, allowing the appeals in favor of the appellant and emphasizing the correct application of relevant notifications and rules. The decision also affirmed the appellant's entitlement to interest on delayed refund as per legal precedents.