9911796707
TMI Blog2021 (2) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... Ranjan, Assistant Commissioner, Authorised Representative for the Respondent ORDER This appeal has been filed by the appellants against order in appeal No NGP/EXCUS/000/APPL/055/15-16/532 dated 11.03.2016 of the Commissioner (Appeals) Central Excise Nagpur. By the impugned order, Commissioner Appeal has held as follows: I hereby uphold the Order in Original No 08/NGP1/2015/AC/Adj/H-1 dated 16.07.2015 passed by the Assistant Commissioner, Central Excise Hingna-I Division Nagpur and reject the appeal of the appellant. 1.2 Assistant Commissioner had vide his Order in Original rejected the refund claim filed by the appellant in terms of Rule 5 of the CENVAT Credit Rules, 2004 and stated as under: I reject the refund claim of ₹ 96,53,590/- (Rupees Ninety Six Lakhs Fifty Three Thousand Five Hundred and Ninety only) for the period January 2015 to March 2015 claimed by the Noticee under Rule 5 of The CENVAT Credit Rules, 2004 and 27/2012CE$ (NT) dated 18.06.2012 issued thereunder read with Section 11B of the Central Excise Act, 1944. 2.1 Appellant is engaged in manufacture of excisable goods namely Electrostatic Precipitator, Supporting Components and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 269) ELT 17 (Guj)] Elcompanies sales Pvt Ltd [2012 (279) ELT 280 (T) affirmed by Hon ble Allahabad High Court at [2014 (310) ELT A89 (ALL)] NBM Industries [2013 (29) STR 208 (GUJ)] o Anita Synthetics Pvt Ltd [2014 (306) ELT 133 (GUJ)] E I Dupont India Pvt Ltd [2014 (305) ELT 282 (GUJ)] o Metflow Cast Pvt Ltd [2016 (331) ELT 335 (GUJ)} Apotex Pharmachem India Pvt Ltd [2015-TIOL-2268-CESTAT-Bang] Arkay Glenrock (P) Ltd [2014 (35) STR 953 9T)] Uniworth Textiles Ltd [2016(341) ELT 438 9T)] In case of Om Metals Infra Projects Ltd [2015-TIOL-1211CESTAT-Del] the benefit has been extended in case of the supply of the goods under ICB, which qualify as deemed exports. Clause (1A) to Explanation 1 to Rule 5 inserted w.e.f 01.03.2015 is prospective and will not apply to refund claims pertaining to period prior to this date. In their case the refund claim has been made for the supplies made by them during the period January to March 2015, to the project claiming the benefit of exemption under S No 336 of Exemption Notification No 12/2012-CE dated 17.03.2012 to a project awarded against International Competitive Bidding. Therefore the supplies made by them du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T)] In view of the insertions made in the rule 5, and the decisions as above there is no merits in this appeal either for the period prior to 01.03.2015 or thereafter and the appeal should be dismissed. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments on appeal. The short point for consideration is admissibility of refund of accumulated CENVAT Credit, in the case where the goods have been supplied to a project awarded under ICB, treating such supplies to be deemed exports. 4.2 Rejecting the arguments advanced by the appellants Commissioner (Appeal) has in impugned order recorded as under: The main grounds on which the refund claim has been rejected by the lower authority is that the appellant has cleared goods in question under Notification No 12/2012-CE dated 17.03.2012 (Sr No 336) read with condition No. 41, against ICB at Nil rate of Central Excise Duty. The supply of goods made against ICB are' treated as deemed export in terms of para 8.1 and 8.2 or Foreign Trade Policy. And as per para 8.3 of foreign Trade Policy, the goods cleared against ICB are eligible for only three benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2004 under which the refund is claimed, the following has been added In the said rules, in rule 5, in Explanation 1, after clause (1), the following clause shall be inserted, namely: (1A) export goods means any goods which are to be taken out of India to a place outside India. Thus the definition of export and export goods as defined in Section 2 of the Customs Act 1962 has been incorporated in Central Excise Rules 2002 vide Notification No. No.8/2015-NT dated 01-03-2015 and in the CENVAT Credit Rules, 2004 vide Notification No. No.6/2015-NT dated 01-03 2015. These notifications are clarificatory in nature and are very much applicable for earlier cases. Thus it is not correct to interpret that inclusion of physical exports in Rule 5 of the Cenvat Credit Rules, 2004 implies that prior to this date all other exports including deemed exports can qualify for - the refund of unutilized Cenvat Credit under Rule 5 of CENVAT Credit Rules, 2004. The inclusion of definition is only clarificatory in nature and importing definition of export from the Customs Act 1962 for earlier period is the only and correct option. The Appellant has during the personal hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai)] Tribunal has observed that: Refund of credit - Export - Deemed export - Refund of unutilised credit availed on inputs used in manufacture of goods cleared under CT-3 certificate - Mere non-description of size and material of goods received by 100% EOU in shipping bills regarding export of goods by 100% EOU cannot mean that inputs received by 100% EOU have not been exported - Once CT-3 certificate received indicating receipt of goods by 100% EOU, supplies to 100% EOU to be considered as deemed export - However, refund having been claimed under Central Excise Act, there have to be physical exports and not deemed exports - Since appellants not physically exported goods but merely supplied the goods to 100% EOU, provisions of Rule 5 of Cenvat Credit Rules, 2004 not applicable - Refund denied. [paras 5, 6] 42. In this regard CESTAT, Principal Bench, New Delhi, in the case of : Tricolite Electrical Industries Ltd Vs Commissioner of C.Ex, Delhi III, Gurgaon 2012 (282) ELT 468 (Tri- Delhi) has clearly held that clearances. made to 100% EOUs or to the projects for which C. Ex duty is exempted cannot be treated as export for benefits under Rule 5 of the CCR 2004. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 6/2006-C.E. As regards supplies to 100% EOUs, as rightly observed by the Commissioner (Appeals) there is no evidence that the goods have been used by those EOUs in manufacture of finished product which were exported out of India under bond. 43. Thus it can be reasonable inferred that such refund is only due if the goods are taken out of India lo a place outside India and therefore the supply of goods against ICB cannot be treated as export for the purpose of Rule 5 of CCR 2004. Thus, in view of the above stated decisions of Hon'ble CESTAT, I find that supply of goods against International Bidding cannot be treated as export for the purpose of Rule 5 or CCR 2004 and thus find that the refund has rightly been rejected by the lower authority,. 44 The various case laws cited by the appellant do not come to their rescue as the facts are different and they pertain to 100% EOUs. I also find that the earlier Order in Appeal passed by my predecessor namely No NGP/EXCUS/000/APPL 227/14-15/798 dated 22.12.2014 and No NGP/EXCUS/000/APPL/222/15-16/1010 dated 06.07.2015 has not dwelled into the definition of export goods and the only question addressed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period; and (c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed. . Notification No 27/2012-CE (NT) dated 18.06.2012 G. S. R -(E).- In exercise of the powers conferred by rule 5 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules ), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No 5/2006 - Central Excise (N.T), dated the 14th March, 2006, published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 156(E), dated the 14th March, 2006, the Central Board of Excise and Customs hereby directs that refund of CENVAT credit shall be allowed subject to the procedure, safeguards, conditions and limitations as specified below, namely:-. 2.0 Safeguards, conditions and limitations .- Refund of CENVAT Credit under rule 5 of the said rules, shall be subjected to the following safeguards, conditions and limitations, namely:- (a) .. (b) .. (c) the value of goods cleared for export during the quarter shall be the sum total of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation. 4.5 Further Rule 6 (6) of the CENVAT Credit Rules, 2004 categorized the clearances of the goods, without payment of duty, but in respect of which the provision of Rule 6 (1), (2), (3) (4) were not applicable. In the said Rule also the clearances for export under bond and the clearances made under the exemption Notification No 12/2012-CE (Sr No 366) under separate categories. The text of the said sub-rule, is reproduced below: Rule 6 (6) of the CENVAT Credit Rules, 2004 as it existed at the relevant time - (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eate any additional liability or restricts any benefit to the subjects. The rule 5, only provides for the refund of accumulated CENVAT Credit in respect of the goods cleared for export under bond or letter of undertaking. In case such refund is not allowed it do not impact the eligibility of the subject to the CENVAT Credit of the duty paid. The admissibility to the CENVAT Credit needs to be determined in terms of Rule 3, 4, 6 and 9 of the CENVAT Credit Rules, 2004. It is not even the case for the department that the CENVAT Credit is not admissible in such cases. In the case of Dilip Kumar Co, referred above, Hon ble Apex Court has further observed: 25. We are not suggesting that literal rule de hors the strict interpretation nor one should ignore to ascertain the interplay between strict interpretation and literal interpretation . We may reiterate at the cost of repetition that strict interpretation of a statute certainly involves literal or plain meaning test. The other tools of interpretation, namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was further observed : In all tax matters one has to interpret the taxation statute strictly. Simply because one class of legal entities is given a benefit which is specifically stated in the Act, does not mean that the benefit can be extended to legal entities not referred to in the Act as there is no equity in matters of taxation.... Yet again, it was observed : It may thus be taken as a maxim of tax law, which although not to be overstressed ought not to be forgotten that, the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax on him , [Russel v. Scott, (1948) 2 All ER 1]. The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible [Ormond Investment Co. v. Betts, (1928) AC 143]. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity [Mapp v. Oram, (1969) 3 All ER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpreted in the light of what is clearly expressed : it cannot imply anything which is not expressed : it cannot import provisions in the statute so as to supply any deficiency : (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of Legislature s failure to express itself clearly . 27. Now coming to the other aspect, as we presently discuss, even with regard to exemption clauses or exemption notifications issued under a taxing statute, this Court in some cases has taken the view that the ambiguity in an exemption notification should be construed in favour of the subject. In subsequent cases, this Court diluted the principle saying that mandatory requirements of exemption clause should be interpreted strictly and the directory conditions of such exemption notification can be condoned if there is sufficient compliance with the main requirements. This, however, did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other, have broadly assumed (we are justified to say this) that the position is wellsettled in the interpretation of a taxing statute : It is the law that any ambiguity in a taxing statute should enure to the benefit of the subject/assessee, but any ambiguity in the exemption clause of exemption notification must be conferred in favour of revenue - and such exemption should be allowed to be availed only to those subjects/assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and that the claimants satisfy all the conditions precedent for availing exemption. Presumably for this reason the Bench which decided Surendra Cotton Oil Mills case (supra) observed that there exists unsatisfactory state of law and the Bench which referred the matter initially, seriously doubted the conclusion in Sun Export Case (supra) that the ambiguity in an exemption notification should be interpreted in favour of the assessee. 41. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... biguously impose a tax on him, that one has to look merely at the words clearly stated and that there is no room for any intendment nor presumption as to tax. It is only the letter of the law and not the spirit of the law to guide the interpreter to decide the liability to tax ignoring any amount of hardship and eschewing equity in taxation. Thus, we may emphatically reiterate that if in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/assessee. But, in a situation where the tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue, the aforesaid conclusions are expounded only as a prelude to better understand jurisprudential basis for our conclusion. We may now consider the decisions which support our view. 48. The next authority, which needs to be referred is the case in Mangalore Chemicals (supra). As we have already made reference to the same earlier, repetition of the same is not necessary. From the above decisions, the following position of law would, therefore, clear. Exemptions from taxation have tendency to increase the burden on the other unexempted class of taxpayers. A person claiming e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds which have been supplied to the EOU or cleared for exports are not cleared under an exemption notification issued under Section 5 of the Central Excise Act, 1944, but are cleared for export either in finished form or in intermediate state for the production of finished goods which get finally exported. This aspect get well highlighted by the Tribunal in the decision in case of Jimtex Pvt ltd, wherein following has been held: 6. Being aggrieved, the appellant has filed appeal before this Tribunal on the ground among others that the adjudicating authority has exceeded the direction in the remand, which was for verification to the export made i.e. to verify the fact of export from the 100% EOU, which was not done and unnecessarily got into the issue of export vis- -vis deemed export. The adjudicating authority was required to verify from his counterpart, having jurisdiction over the factory of M/s. Haria Exports Ltd., a 100% EOU at Vapi and as such the impugned order is vitiated and fit to be set aside. It is further contended that Rule 5 of Cenvat Credit Rules does not require that the goods must be directly exported from the factory, even if the inputs are used in the manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Having considered the rival contentions, I find that Appendix to Notification No. 11/2002 wherein clause (4) provides that manufacturer (appellant) is required to submit refund application along with Bill of Lading or shipping bill or export proof duly certified by any office of Customs, to the effect that the goods have in fact been exported. There is no ambiguity in the requirement as the documents referred to under clause (4) are only available in case of actual export and not deemed export. The appellant herein have admittedly failed to furnish the evidence of actual export in spite of opportunity in the second round of litigation. Thus, the rejection of claim by the learned Commissioner (Appeals) is correct and in accordance with law. The rulings relied upon by the appellant do not lay down any ratio of law and only allowed by way of remand. Thus, the appeal is dismissed and the impugned order is upheld. 9. It is noticed that the appellant have already paid back 50% of the refund as directed vide Stay Order No. S/253/2013/SMB/C-IV, dated 1-3-2013, the appellant is directed to deposit the balance refund received and report compliance to the respondent Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the goods procured from the Domestic Tariff Area by units in special economic zones against foreign exchange. The parity with exports is accorded to supplies effected to Special Economic Zones through the provision of the statute governing such Zones. 9. The decision of the Tribunal in Commissioner of Central Excise, Pune-II v. Quality Screens [2008 (226) E.L.T. 608 (Tri.Mumbai)] makes it amply clear that only physical exports would entitle the refund under Rule 5 of the Cenvat Credit Rules, 2004. The decision of the Tribunal in Commissioner of Central Excise Service Tax, Rajkot v. Parth Trading Co. [2016 (338) E.L.T. 616 (Tri.-Ahmd.)] relies upon the circular dated 28th April, 2015. Likewise, the decision in Shri Bajrang Power Ispat Ltd. v. Commissioner of Central Excise, Raipur [2012 (282) E.L.T. 108 (Tri.-Del.)] also relies upon the circular of the Central Board of Excise and Customs. The circular has been issued to allay the apprehensions of the trade that amendments to Rule 5 of Cenvat Credit Rules, 2004 and Rule 18 of Central Excise Rules, 2002 may alter any privilege of goods cleared to Special Economic Zone to the extent that such goods are in conformity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no question of law much less any substantial question of law, arises out of the order of the Tribunal and even if it arises, the answer is very obvious and we, therefore, hold that the Tribunal is justified and has not committed any substantial error of law in dismissing the appeal of the Revenue and confirming the order of the learned Commissioner (Appeals) holding that the clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004. 7. Reliance placed by the ld. Commissioner (Appeals) in the impugned order in case of Tricolite Electrical Indus. Ltd. (supra) is not applicable to the present case, in as much as, operation of the order in the case of Trigar Steel Engg. (supra), relied therein has been stayed by the Honble Bombay High Court as reported in 2011 (263) E.L.T. A 104 (Bom.). The said decision, do not dwell on the issue independently but relies upon the decision in case of Apotex Pharmachem India Pvt Ltd, which was not the case of supply made to a project awarded u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E dated 17.03.2012 ( Sr. No. 336 read with condition No. 41) against International Competitive Bidding (for short ICB ) at Nil rate of Central Excise Duty. The supply of goods made against ICB are treated as deemed export in terms of para 8.1 and 8.2 of foreign Trade Policy. And as per para 8.3 of foreign Trade Policy, the goods cleared against ICB are eligible for only three benefits viz. Advance Authorisation / Advance Authorisation for annual requirement/ DFIA. Deemed Export Drawback and Exemption from terminal excise duty where supplies are made against ICB only 8. In view of the forgoing it appears that the as per explanation (1A) of the Rule 5 of Cenvat Credit Rule, 2004 any goods which are taken out of India to a place outside India are treated as export goods are eligible for cash refund of unutilised Cenvat Credit lying in Cenvat Account under Rule 5 ibid. In this case, the goods are cleared against ICB hence treated as deemed export, and are eligible for Advance Authorisation / Advance Authorisation for annual requirement / DFIA, Deemed Export Drawback and Exemption from terminal excise duty where supplies are made against ICB only. Therefore an aforesaid goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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