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PJ/Case Law /2016-17/3317

Refund of accumulated cenvat credit when goods supplied to SEZ unit

Case:- TRINITY AGENCIES VERSUSCOMMISSIONER OF C. EX., MUMBAI-I
 
Citation:-2016 (339) E.L.T. 578 (Tri. - Mumbai)
 
Brief facts:-This appeal is directed against Order-in-Appeal No. SB(15) 15/1711/2011, dated 7-3-2011 passed by the Commissioner of Central Excise (Appeals), Mumbai, whereby ld. Commissioner (Appeals) allowed the appeal of the Revenue.
The fact of the case is that the appellant havecleared the goods to SEZ and availed Cenvat credit in respect of input used thereunder on the closure of the unit. Appellant claimed the refund of the balance lying in the Cenvat account in terms of Rule 5 of Cenvat Credit Rules, 2004 on the ground that goods were supplied to SEZ. The adjudicating authority sanctioned the refund and has given finding that refund claim is not time bar as claim was made towards balance of RG 23 Pt. II which was lying as on 13-5-2008 and the refund was claimed on 26-3-2008 hence the same is not time bar. Secondly Adjudicating authority held that supplies made to the SEZ has been treated as export even as per the SEZ Act, 2005, accordingly refund was allowed. Aggrieved by the Order-in-Original, Revenue filed appeal before the Commissioner (Appeals) wherein ld. Commissioner (Appeals) referred the Order of the Original authority only on the issue that supplies made to SEZ is not exports and the refund is not admissible for the period prior to issue of amendment Notification No. 50/2008-C.E. (N.T.), dated 31-12-2008. However ld. Commissioner (Appeals) has not given any findings on time bar issue. Aggrieved by the impugned order, appellant filed this appeal.
 
Appellant’s contention:- Shri. R.V. Mashelkar, ld. Consultant with Shri. R.V Shetty, Advocate for the Appellant submits that it has been settled in various judgments that supplies made to SEZ has been treated at par with physical export made out of India and all the benefits and incentive available to the physical export are mutatis mutandis applicable to the supplies made to the SEZ. Though the Notification No. 50/2008-C.E. (N.T.), dated 31-12-2008 issued but in the decision given by the Hon’ble High Courts and Tribunals even prior to issue of this notification supplies made to SEZ have been treated as exports as per the provision made under the SEZ Act itself. Therefore Ld. Adjudicating authority has rightly sanctioned the refund claim. He submits, refund was filed in respect of closing balance of their Cenvat account which has been accumulated and lying in the balance as on 13-5-2008 i.e. date of surrendering of the registration of appellant’s factory, therefore time of limitation should be reckoned from 13-5-2008 from the surrender of registration, hence the refund is within the time.
 
Respondent’s contention:- Shri. R.K. Maji, Ld. Asstt. Commissioner (A.R.)appearing on behalf of the Revenue reiterates the findings of the impugned order.
 
Reasoning of judgment:- They find that as regard supplies made to SEZ, theissue that supplies made to SEZ is exports or otherwise, even in case where supplies were made prior to issue of Notification No. 50/2008-C.E. (N.T.), dated 31-12-2008 has been settled in various judgments which referred below :-
(a)       B.J. Services Company Middle East Ltd. v. C.C. (Imports), Mumbai [2015 (327) E.L.T. 268 (Tri.-Mumbai)]
(b)       Siemens Ltd. v. Commissioner of C. Ex., Navi Mumbai [2015 (321) E.L.T. 493 (Tri.-Mumbai)]
(c)       Commissioner v. Siemens Limited - 2015 (321) E.L.T. A225 (Bom.)
(d)       Tata Consulting Engineers Ltd. v. Commr. of Service Tax, Mumbai [2014 (33) S.T.R. 655 (Tri.-Mumbai)]
 
As per the above judgments, it is settled that supplies made to SEZ either prior to 2008 or thereafter has been considered as exports and consequently assessee is entitled for all the benefits and incentives which otherwise available to physical export of goods out of India including refund under Rule 5 of Cenvat Credit Rules, 2004 or Rule 18 of Central Excise Rules, 2002. As regard the issue of time bar, they find that the adjudicating authority has given categorical findings that the refund is in respect of accumulated credit therefore limitation of one year shall not apply. Though this findings has been challenged by the Revenue before the Commissioner (Appeals) but he has not given any findings on time bar therefore finding on time bar given by the Adjudicating authority attained finality particularly for the reason that Revenue has not challenged order of the Commissioner (Appeals) on the issue of time bar therefore at this stage time bar issue cannot be raised. In view of the above discussion, they are of the view that appellant is entitled for the refund as held by the Adjudicating authority. Therefore, they set aside the impugned order and uphold the Order-in-Original. Appeal is allowed.
 
Decision:-Appeal allowed.
 
Comment:- The crux of the case is that refund of accumulated cenvat credit is admissible to goods supplied to SEZ as clearance to SEZ is considered as export. The appellant have cleared the goods to SEZ and availed refund of Cenvat credit in respect of input used thereunder on the closure of the unit. Appellant claimed the refund of the balance lying in the Cenvat account in terms of Rule 5 of Cenvat Credit Rules, 2004 on the ground that goods were supplied to SEZ. All benefits relating to exports including refund of accumulated credit is admissible as per Rule 5 of Cenvat Credit Rules, 2004 and number of judicial pronouncements rendered.  
 
Prepared by:- Monika Tak

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