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TMI Blog2019 (6) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced it and now it is only when the proviso is attracted that the amount of refund can be paid over to the applicant or else it has to be credited to the fund. Even earlier, the amount used to be credited to the fund, but the proviso says that instead of being credited to the fund, it can be paid to the applicant if such amount in this case is relatable to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made. The crucial words are that the refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made or any notification issued under this Act . If the excisable goods are not used as inputs in accordance with the rules made, to our mind, there is no question of any refund. A perusal of this rule indicates that where any input or input service is used in the final product, which is cleared for export etc. or used in the intermediate product cleared for export or used for providing output service which is exported, then, the Cenvat Credit in respect of the input or input service so used shall be allowed to be utilised by the manufacturer or provider of output service towards payment of duty of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 20 10 (256) ELT 523 (Bom.) The Division Bench referred the following questions for opinion of this Larger Bench:- (a) Whether cash refund is permissible in terms of clause (c) to the proviso to section 11B(2) of the Central Excise Act, 1944 where an assessee is unable to utilize credit on inputs? (b) Whether by exercising power under Section 11B of the said Act of 1944, a refund of un-utilised amount of Cenvat Credit on account of the closure of manufacturing activities can be granted? (c) Whether what is observed in the order dated 25 th January 2007 passed by the Apex Court in Petition for Special Leave to Appeal (Civil) No. CC 467 of 2007 (Union of India vs Slovak India Trading Company Pvt Ltd.) can be read as a declaration of law under Article 141 of the Constitution of India? 2. In terms of this reference, the Hon ble the Chief Justice constituted this Larger Bench. 3. The facts are already set out succinctly in the referring order. A very brief reference is required to be made thereto in order to appreciate the challenge to the order passed by the said Customs, Excise and Service Tax Appellate Tribunal, West ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Cenvat Credit availed by the assessee, in the circumstances set out, can be allowed or not is the moot question. That question will have to be answered and that the view taken by the earlier Division Bench does not appear to be correct. That is how this reference has been made. 7. Before we proceed, we must note certain provisions of the Central Excise Act, 1944, which is an Act to consolidate and amend the law relating to Central duties of excise. The levy and collection of duty is dealt with by Chapter II. By section 2A, which appears in Chapter I, it is stated that in this Act, save as other wise expressly provided and unless the context otherwise requires, references to the expressions duty , duties , duty of excise and duties of excise shall be construed to include a reference to Central Value Added Tax (CENVAT) . There is a power to grant exemption from duty of excise and it is undisputed that there is a distinct provision (section 11B) enabling the claiming of refund. That section reads as under:- 11B.Claim for refund of duty and interest, if any, paid on such duty- (1) Any person claiming refund of any duty of excise and interest, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (f) the duty of excise and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify: Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person. (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court in any other pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes aforesaid; (c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory; (d) in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction; (e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person; (ea) in the case of goods which are exempt from payment of duty by a special order issued under subsection (2) of section 5A, the date of issue of such order; (eb) in case where duty of excise is paid provisionally under this act or the rules made thereunder, the date of adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Central Excise (Bengaluru) 2006 (205) ELT 956 to urge that the appellant in that case claimed refund on un-utilised Cenvat Credit in their account as on the date of the closure of their factory. The Commissioner (Appeals) took a view that there is no provision under Rule 5 of the Cenvat Credit Rules to grant cash refund. The argument was that this order was not legal and proper for the reasons set out by the tribunal. The South Zonal Bench of the CESTAT referred to the view taken by the CESTAT, Delhi and Mumbai to hold that refund claimed is eligible to the assessee and refund has to be made in cash when the assessee goes out of the erstwhile Modvat Scheme or their unit is closed. The view is taken because of the consistent approach of the tribunal. The consistent approach was that such refund claims are logical and a refund has to be made in cash when the assessee goes out of the Modvat Scheme or the company is closed. Thus, appeal of Slovak was allowed. 11. The Union of India, aggrieved and dissatisfied with this view of the tribunal, preferred an appeal, namely, Central Excise Appeal No.5 of 2006 before the High Court of Karnataka at Bengaluru. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tical to the cases before the various Benches of the tribunal, then, the Revenue cannot be allowed to take a different view. Following this principle, the Division Bench dismissed the Revenue s appeal. Mr.Patil would submit that the view taken in the case of Jain Vanguard (supra) was confirmed by the Hon ble Supreme Court because the Hon ble Supreme Court dismissed the appeal of the Union of India by observing that it finds no reason to interfere with the order of the Division Bench in exercise of the discretion under Article 136 of the Constitution of India. Mr.Patil submits that merely because in the next line the Hon ble Supreme Court says that the Special Leave Petition is dismissed leaving the question of law open would not mean that the later Division Bench in this case was free to differ from the view taken by the earlier Division Bench in Jain Vanguard (supra). Mr.Patil, therefore, would submit that the referring order, with great respect, is uncalled for, as even thereafter, several orders have been passed by tribunals all over India taking the same view. Once such view is accepted by the Revenue, then, it cannot be selective in its approach. The Revenue does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 (112) ELT 353 (SC). Mr.Patil finally attempted to urge that a long standing decision adopting a particular view should be followed. In that regard, our attention has been invited to the judgment in the case of Shanker Raju vs. Union of India 2011 (271) ELT 492. Mr.Patil emphasises that the doctrine of binding precedent has a element of certainty and consistency. The pronouncement of law by the Larger Bench of the tribunal was binding on a Bench of two members and when an appeal against the judgment of both has been dismissed by the higher court, then, discipline requires that this consistent view must be followed. Mr.Patil also tried to emphasise before us that the doctrine of merger could not have been deviated from. Today, the judgment in the case of Slovak India (supra) has merged with the view taken by the Hon ble Supreme Court. Hence, we should not reopen the controversy. 18. On the other hand, Mr. Jetly appearing for the Revenue would submit that the referring order has rightly noted the controversy. In the referring order, this court has found that the attempt is to claim something which the law does not permit to be claimed at all. If the law does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Thus, the narrow issue before us is whether cash refund is permissible when Cenvat Credit is un-utilised. 21. In this regard, a reference can usefully be made to the judgment of the Hon ble Supreme Court setting out the fundamental legal principles. These are that in a fiscal statute, nothing can be read, into its provisions and rather should not be read, which is expressly not there. In other words, an implied meaning cannot be given. The Hon ble Supreme Court in one of the decisions, in the case of Union of India and Ors. vs. Ind-Swift Laboratories Limited (2011) 4 SCC 635 summarised the legal position thus:- 20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in CST v. Modi Sugar Mills Ltd. wherein this Court at AIR para 11 has observed as follows: 11. ..In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared for export under bond or letter of undertaking, as the case may be, or used in the imtermediate products cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of, (i) duty of excise on any final products cleared for home consumption or for export on payment of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification: Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty. Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is evident that the order-in-original has been passed by accepting the plea that the assessee was availing Cenvat Credit of duties paid on the inputs purchased and was utilising the same for payment of additional duties of excise on final products at the time of clearance of the same. According to the case of the assessee, by a notification dated 9th July, 2004, the Government of India had exempted all goods appearing within the Schedule of the said Act of 1978. The assessee utilised credit balance of additional duty of excise in their RG-23A Part II Register as on 6th September, 2004, which could not be utilised in future and had remained unutilised. The condition was that since none of the products are charged to additional duties of excise, it would not be possible to utilise the said un-utilised credit and the assessee was liable for cash refund. This plea was not accepted in the order-in-original, but came to be accepted by the appellate authority. The Revenue approached the CESTAT against the appellate authority s view, but the CESTAT dismissed the Revenue s appeal. Now, if the cash refund was not permissible, then, it is evident that by reading into the provision someth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word input is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. The crucial requirement, therefore, is that all goods used in or in relation to the manufacture of final products qualify as input . This presupposes that the element of manufacture must be present. 29. In J.K. Cotton Spg. Wvg. Mills Co. Ltd. v. STO [AIR 1965 SC 1310:(1965) 16 STC 563] this Court held that the expression in the manufacture of goods should normally encompass the entire process carried on by the dealer of converting raw material into finished goods. It was further held that where any particular process (generation of electricity) is so integrally connected with the ultimate production of goods, that, but for such process, manufacture of goods would be inexpedient, then goods required in such process would fall within the expression in the manufacture of goods . 30. In Union Carbide India Ltd. v. CCE [(1996) 86 ELT 613 (Tri)] a larger Bench of CEGAT observed that a wide impact of the express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product. 27. The attempt made to rely upon the transitional provision, particularly Rule 11 carries the case no further. Rule 11 of the Cenvat Credit Rules, 2004 reads as under:- Rule 11. Transitional provision.- (1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as they existed prior to the 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value of quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any amount of credit earned by a manufacturer under the Cenvat Credit Rules, 2002, as they existed prior to the 10th September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002 as they existed prior to 10th September, 2004 and remaining un-utilised on that day shall be allowed as Cenvat Credit to such manufacturer or provider of output service under these rules, and be allowed to be utilised in accordance with these rules. This is how the transitional provision enables carrying forward of the un-utilised Cenvat Credit. That is a distinct contingency altogether. That transitional provision does not enable us to hold that the amount of un-utilised Cenvat Credit can be refunded in cash. 29. We do not think that by taking assistance of this provision, we will be able to hold as contended by Mr.Patil that the Cenvat Credit can be refunded even in relation to those inputs which have not been used in the manufacture of the final product or the exported goods. We are called upon to read something in the substantive rule and which is totally absent therein. When Rule 5 follows Rule 4, which is titled as Conditions for Allowing Cenvat Credit , th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund. After being approached, what the CESTAT observed is that there is a consistent view taken by the tribunal that such claim is eligible and the assessee can seek refund when it goes out of the Modvat scheme (predecessor of Cenvat) or the unit is closed. This is the reasoning in the tribunal s order and though the appeal of the Revenue before the High Court of Karnataka at Bengaluru raised several grounds and pleas, the High Court referred to the arguments and in para 4 of its order, reproduced Rule 5 of the Cenvat Credit Rules, 2002. In para 5, the reasoning of the High Court of Karnataka reads thus:- 5. There is no express prohibition in terms of Rule 5. Even otherwise, it refers to a manufacturer as we see from Rule 5 itself. Admittedly, in the case on hand, there is no manufacture in the light of closure of the Company. Therefore, Rule 5 is not available for the purpose of rejection as rightly rules by the Tribunal. The Tribunal has noticed that various case laws in which similar claims were allowed. The Tribunal, in our view, is fully justified in ordering refund particularly in the light of the closure of the factory and in the light of the assessee coming out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. The question of law was still open to be raised and equally examined by us. There is no question of judicial discipline in such matters. The counsel relied upon this principle of judicial discipline by inviting our attention to the judgment of the Hon ble Rajasthan High Court in the case of Welcure Drugs and Pharmaceuticals Ltd. vs. Commissioner of Central Excise, Jaipur reported in 2018 (15) GST Law Times Page 257. There, the Hon ble Rajasthan High Court concluded that the Revenue cannot seek to urge before that High Court that the view taken by four different High Courts approving the order of CESTAT has lost its persuasive value, particularly when the Special Leave Petitions against the view taken by four different High Courts were either not filed or filed but not entertained. Thus, the tribunals have taken a consistent view and the Revenue could not succeed in having that set aside. It is in these circumstances, the Rajasthan High Court negatived the contention of the Revenue that the tribunal under the jurisdiction of that High Court could have distinguished the orders and judgments of its Benches. That was found to be contrary to the judicial discipline. It is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involving identical issue was not pressed and therefore, dismissed. Hence, a contrary stand cannot be taken and that will confuse everybody. This judgment, therefore, has no application to the issue before us. 39. The referring order has already discussed in detail as to how the principle of merger cannot be invoked in this case. In the order passed in the case of Jain Venguard (supra), the question of law was expressly kept open. Hence, the earlier view of the tribunal does not merge with dismissal of the Special Leave Petition in the case of Slovak India (supra). Hence, this principle has also no application. 40. As a result of the above discussion, we answer the questions of law framed above as (a) and (b) in the negative. They have to be answered against the assessee and in favour of the Revenue. Questions (a) and (b) having been answered accordingly, needless to state that the order of the Hon ble Supreme Court in the case of Slovak India (supra) cannot be read as a declaration of law under Article 141 of the Constitution of India. 41. The reference is disposed of accordingly. The appeals filed by respective parties may now be listed be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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