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TMI Blog2015 (3) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... the same prior to export as non-availment of Cenvat credit on inputs. Government finds that once department accepted initial availing of Cenvat credit and subsequent reversal of same prior to export as non-availment of Cenvat facility on inputs, they cannot adopt different yardstick for input services whose credit was reversed subsequent to exports. Reversal of Cenvat credit before utilization amounts to non-taking of credit that such reversal can be done subsequent to export of goods. Government further observes that the department has treated availment of Cenvat credit on inputs and reversed subsequently before exports as non-availment of Cenvat credit on inputs and had allowed drawback at the higher rate @ 16% initially. At that time no dispute of non-reversal of Cenvat credit of input services was raised. The said point was raised subsequently and demand was raised on the ground that applicant had availed Cenvat credit of input services. It means original authority was also not clear about the issue in the beginning. So, no mala fide can be attributed to the applicant. Since, applicant has reversed the Cenvat credit in input services of ₹ 80,47,036/- along with interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the lower rate of drawback @ 3% and erroneously granted excess drawback of ₹ 15,79,26,612/- was confirmed as liable to be recovered under the provisions of Rule 16 of Customs, Central Excise Duties Service Tax Drawback Rules, 1995. 3. Being aggrieved by the orders of the adjudicating authority, the applicants preferred appeal with the Commissioner (Appeals) who initially passed the interim order No. SR/STAT/08/NGP/2011, dated 17-2-2011 for the pre-deposit of 100% of (disputed) amount under confirmed demand i.e. ₹ 15,79,26,692/- with interest. The applicant herein made a further payment of ₹ 80,47,036/- in RG-23A pt.-II (Cenvat Account) along with interest of ₹ 31,74,220/- and made another application before Commissioner (Appeals) for modification of above stay of 28-2-2011 so as up to stay without making any pre-deposit of the aforesaid full amount. The Commissioner (Appeals) vide order-in-appeal No. SR/301/NGP/2010, dated 28-3-2011 rejected the appeal on the ground of non-compliance of the stay order dated 17-2-2011 directing the applicant to make a pre-deposit of 100% of duty demanded. 3.1 Being aggrieved by the Order-in-Appeal dated 28-3-2011, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on inputs should not be taken as Cenvat credit, it does not specify that duty paid on input services should not be taken as Cenvat credit. Further the condition that duty paid on input service was expressly specified only under Notification No. 103/2008-Cus. (N.T.), dated 29-8-2008. Therefore, during the period January, 2008 to March, 2008 when the applicants exported the final product under drawback scheme, there was no requirement that Cenvat credit of service tax paid on input services should not have been availed to be eligible for drawback at the rate of 16%. Therefore, contention of the Commissioner (Appeals) that credit of input service tax has been availed and hence drawback @ 16% would not be allowed to the applicants, is incorrect and clearly contrary to the law. The impugned order of the Commissioner (Appeals) rejecting the appeal filed by the applicants and upholding the incorrect order of Deputy Commissioner, is incorrect and unsustainable in law. Hence the impugned order is liable to be set aside. 4.3 The notification stipulates that Cenvat credit on the inputs should not be availed for availment of higher rate of drawback. In this regard, the Cenvat credit on in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose, the applicants had reversed the credit of duty paid on the inputs used in the manufacture of exported final product and such credit reversed amounted to ₹ 13,97,65,631/-. This was undisputedly considered as fulfilment of the condition that Cenvat credit on inputs had not been availed. At the time of claiming the drawback, the applicants took the plea that an amount of ₹ 80,47,036/- which was availed as credit of service tax paid on the input services used in the final product exported under drawback scheme, was availed. The only case of the department is that the applicants were not entitled to drawback @ 16% since Cenvat credit of service tax paid on input service used in the manufacture of final product exported under drawback scheme had been availed and accordingly the applicants would be entitled to drawback @ 3% which amounted to ₹ 3,60,37,357/-. The applicants after the stay order dated 17-2-2011, passed by the Commissioner (Appeals) paid back ₹ 80,47,036/- being the credit of service tax paid on input service used in the manufacture of final product exported under drawback scheme and also paid in cash ₹ 31,74,220/- towards the interest on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit was reversed prior to the clearance of the goods for export. The issue of whether reversal of Cenvat credit on the input services is necessary for the claiming drawback is under dispute. Further, the credit on input service was actually reversed by the applicant with interest as allowed by the various High Court and Supreme Court decisions. Finally, the amount of credit is very small compared to the drawback demand of ₹ 15 crores. 4.8 It is well settled law that when the statute is clear and there is no ambiguity in it then the literal construction of the statute has to be followed. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. In the judgment of the Tisco Ltd. v. CCE - 2000 (118) E.L.T. 104 (T-LB), the Larger Bench of the Tribunal has stated that when there is no ambiguity in the wording of the notification the literal construction must be followed. The decision of the Larger Bench has been affirmed by the Hon ble Supreme Court reported at 2001 (128) E.L.T. A67 (S.C.). 4.9 The Notification No. 68/2007-Cus. (N.T.), dated 16-7-2007 was superceded by Notification No. 103/2008-Cus. (N.T.), dated 29-8-2008 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicants. In other words, the department has not filed any appeal against the said decision sanctioning drawback to the applicants. The department had only issued the present show cause notice proposing to recover the drawback sanctioned to the applicants. In the absence of any challenge by way of appeal against order sanctioning drawback, the present proceedings cannot survive. This is the settled legal position. 5. The applicant further in their written submission dated 17-5-2013, wherein apart from reiterating contents of grounds of revision application, mainly stated as under :- 5.1 The decision of Tribunal in Go Go International Pvt. Ltd. v. Commissioner of Customs (Export), Nhava Sheva reported in 2010 (255) E.L.T. 81 (Tri.-Bom.) and order of Government of India in case of Texellance Overseas reported as 2012 (284) E.L.T. 742 (G.O.I.) is not applicable in the present case. 5.2 The Board s Circular Nos. 858/16/2007-CX., dated 8-11-2007 and 46/2011-Cus., dated 20-10-2011 also provide that reversal of Cenvat credit amounts to non-availment of Cenvat credit. Being aggrieved by the said Order-in-Appeal dated 28-3-2011, the applicant filed revision application. Now, 371 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Notification No. 68/2007, dated 16-7-2007 the expression when Cenvat facility has not been availed, used in the said Schedule, shall mean that the exporter shall satisfy the following conditions, namely (i). The exporter shall declare, and if necessary, establish to the satisfaction of the Assistant Commissioner of Customs or Assistant Commissioner of Central Excise or Deputy Commissioner of Customs or Deputy Commissioner of Central Excise, as the case may be, that no Cenvat facility has been availed for any of the inputs or input services used in the manufacture of the export product . The word facility is important it has been explicitly provided that if the facility of CENVAT is availed then drawback at reduced rates shall be available. CENVAT facility includes CENVAT credit of input and input services. 6.3 The Hon ble Authority for Advance Rulings, New Delhi reported in 2008 (232) E.L.T. 169 (AAR) in the case of In re :VMT Spinning Co. Ltd. vide Ruling AAR/5/ST/2008, dated 11-9-2008 in Application No. AAR/15/S.T./2007 held that when Cenvat credit of inputs services is availed, then higher rate of drawback cannot be claimed. Similar view has been taken by GOI in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinguishable and which were given in different contexts. Moreover the case laws cited by the appellant in respect of Bombay Dyeing Mfg. Co. Ltd. - 2007 (215) E.L.T. 3 are clearly distinguishable from the facts of the present case as the same dealt with condition of availment of CENVAT credit for claiming exemption under Notification No. 14/2002-C.E. and the order of the Hon ble High Court of Bombay dated 23-7-2012 in the case of Steelco Gujarat Ltd. in Writ Petition No. 7033/2011 dealt with Duty Free Import Authorisation, whereas the present case dealt with claim of drawback. 6.7 Hon ble Supreme Court in the case of Columbia Sportswear Co. v. Director of Income Tax, Bangalore - 2012 (283) E.L.T. 321 (S.C.) held that Advance Rulings Authority - Nature of - It is a Tribunal within meaning of expression in Articles 136 and 227 of Constitution of India - It is a body acting in judicial capacity - It determines transaction, tax liability arising out of it and quantum of income - Such determination may include issue of fact or law, which is not just advisory but binding on impugned transaction, parties involved, Commissioner and income-tax authorities subordinate to him, and princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned export goods. Commissioner (Appeals) vide impugned order-in-appeal dated 28-8-12 has upheld the impugned order-in-original and rejected the appeal filed by the applicant. Being aggrieved by the impugned Order-in-Appeal, the applicant has filed this revision application on grounds mentioned in Para 4 above. 10. Government observes that provision of drawback of duty of material/inputs used in manufacture of export product has been provided under Section 75 of the Customs Act, 1962. Further, Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 has been formulated under said Section 75 of the Customs Act, 1962. The said Drawback Rules, 1995 as amended, empowers the Government to issue notification at such amount or at such rate, as determined by the Central Government. The Central Government has issued various notifications including Notification No. 68/2007-Cus. (N.T.), dated 16-7-2007 and Notification No. 103/2008-Cus. (N.T.), dated 29-8-2008 prescribing (AIR) drawback rates. 11. Government notes that the appellate authority has observed that Notification No. 68/2007-Cus. (N.T.) issued under Rule 3(1) of the said Drawback Rules, 1995 provides for full rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount has been availed as credit on any inputs, used in manufacture of final product, then such Cenvat credit should be reduced from eligible drawback. The rate of drawback applicable for different exports are notified by Government by issuing a Notification under Rule 3(1) of Drawback Rules after considering all the relevant factors including the amount of duty involved on inputs input services. So, the drawback rate fixed has taken into account the service tax paid on input services also. 11.2 Government observes that the Notification No. 68/2007-Cus. (N.T.), dated 16-7-2007 prescribes two rates of drawback viz first when facility of Cenvat credit was availed , which is customs portion of drawback and second when facility of Cenvat Credit not availed , which is sum total of Customs, Central Excise and Service Tax portion of drawback. The difference in two rates refers to drawback of Central Excise and Service Tax portion put together. The applicant has also availed Cenvat credit facility in respect of service tax paid on input services which also amounts to availing facility of Cenvat credit. The Notification No. 103/2008-Cus. (N.T.) has inserted the condition of availment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso recorded in the impugned order-in-original and order-in-appeal. As such department has accepted the availment of Cenvat credit and subsequent reversal of the same prior to export as non-availment of Cenvat credit on inputs. Government finds that once department accepted initial availing of Cenvat credit and subsequent reversal of same prior to export as non-availment of Cenvat facility on inputs, they cannot adopt different yardstick for input services whose credit was reversed subsequent to exports. 12.1 The department in their counter written submissions dated 17-5-13 has confirmed the reversal of involved input service credit of ₹ 80,47,036/- along with interest of ₹ 3,17,420/-. Applicant has claimed that they have reversed the said Cenvat credit before utilization as the said amount remained in balance in their account. Department has not objected to said claim of reversal before utilization. They have submitted copies of relevant pages of Cenvat credit account maintained in their system and also a summary of month-wise balance in such Cenvat credit account which shows the Cenvat credit of ₹ 80,47,036/- was always in balance. Department has not objected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has given judgment dated 15-4-2013 in Writ Petition No. 5894/2011 in case of M/s. Sterling Agro Industries Ltd., Malanpur reported as 2013-TIOL-329-HC-MP-CX. The said W.P. was filed against G.O.I. Revision Order No. 214-215/10-Cus., dated 6-7-2010 in which it was held that since the applicant manufactured and exported the goods availing facility of Rule 19(2) of the Central Excise Rules, 2002, the benefit of drawback cannot be allowed in terms of Condition 7(f) of the Notification No. 68/2007-Cus. (N.T.) and condition No. 8(F) of the Notification No. 103/2008-Cus. (N.T.). In the said order dated 15-4-2013, the Hon ble Madhya Pradesh High Court by relying upon judgment of Hon ble Supreme Court in the case of M/s. Chandrapur Magnet Wires (P) Ltd. v CCE, Nagpur and also in the case of CCE, Mumbai v. Bombay Dyeing Mfg. Co. Ltd., held that as the petitioner had paid the excise duty subsequent to issue of show cause notice and deposited the CENVAT credit, he was eligible for benefit of drawback. It is pertinent to note that in the said order, while dealing with aspect of admissibility of drawback under Section 75 of the Customs Act, 1962; ratio of judgments relating to benefit of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court has held that the contention of department that assessee has reversed Cenvat credit after detection by the department and hence they are not eligible for exemption is devoid of merit and misplaced as well, because mere fact of reversal of credit is sufficient compliance to claim the indicated benefit. This order of Hon ble High Court clearly spells out that even after detection, the reversal of Cenvat credit amounts to non-availment of Cenvat credit. (d) Hon ble Gujarat High Court in case of CCE v. Ashima Dyecot Ltd., relying upon above judgments in case of Chandrapur Magnet Wires (P) Ltd. and Hello Mineral Waters Pvt. Ltd. has held that reversal of credit amounts to non-availment of credit. This order of Hon ble High Court has further been affirmed by the Hon ble Supreme Court. (e) In the case of CCE, Mumbai v. Bombay Dyeing Manufacturing Co. Ltd., Hon ble Supreme Court has held that, the assessee got credit which was never utilized and before removal of goods, they reversed the same, which amounts to not taking credit. 12.6 The harmonous reading of above said judgments clearly state that reversal of Cenvat credit before utilization amounts to non-taki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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