Refund of Cenvat credit on Input Services under Rule 5 of CCR, 2004

PJ/Case Laws/2011-12/1347

Case: ELAPPA GRANITE v/s CCE, SALEM

Citation: 2009 (92) RLT 686 (CESTAT-Che.)

Issue:- Refund of unutilized Service Tax credit under Rule 5 of CCR, 2004 prior to issuance of Notification u/Rule 5 – whether admissible.

Brief Facts:- Appellant is a 100% EOU unit. It had exported their final products during the period 1/05 to 10/05. Rule 5 of Cenvat Credit Rules, 2004 provides for utilization of input duty for the payment of output duty i.e. duty on taxable output services. Appellant claimed refund of service tax paid on input services consumed in the manufacture of goods exported under Rule 5 of CCR, 2004.

The Lower Authorities denied the credit to the extent of Rs. 55,023/- on the ground that during the material period the Central Govt. has not issued any Notification under the said rule regarding any safeguard, conditions and limitations subject to which the refund of credit relating to input service could be allowed.

Matter is before the Tribunal.

Appellant’s Contention:- Appellant contended that even though the said Rule provided for a Notification by the Central Govt. for grant of refund, no notification was issued after the Cenvat Credit Rules, 2002 were replaced by Cenvat Credit Rules, 2004. As the Rule 5 of the Cenvat Credit Rules, 2004 provided for the refund of input duty, therefore, the denial of the refund by the lower authorities is not sustainable. Reliance was placed on the case of CCE, Pondicherry Vs. Himalaya Granites Ltd. [2008 (228) ELT 492 (Tri- Chen.)] in which the refund of input duty was allowed before the issue of Notification under the said rule.

Reasoning of Judgment:- The Tribunal held that the claim for refund of input credit is admissible in terms of Rule 5 of CCR, 2004. For export made between 10.09.2004 and 14.03.2006, similar claim for refund of duty relatable to inputs were being allowed even though there was no notification issued under Rule 5. Therefore, there is no justification to deny refund relatable to input services used for production of goods exported during the same period. The judgment in the case of CCE Pondicherry Vs. Himalaya Granites Ltd was referred were in similar refund was allowed. Thus, the refund of credit on inputs used in the manufacturing of the exported finished products under the Rule 5 of Cenvat Credit Rules, 2004 is admissible even prior to the Notification. Impugned order of lower authority is set aside.

Decision:- Appeal allowed.

Comment:- This is very good decision. When the rule says about the grant of refund of input and input services but the procedure was prescribed through notification later on, then such notification has retrospective effect.

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PJ/Case Laws/2011-12/1347

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