Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/3011

Whether DTA unit clearing the goods to 100% EOU can be termed as export, allowing DTA unit to claim refund of unutilised Cenvat credit?

Case:-COMMISSIONER VersusMETFLOW CAST PVT. LTD.
 
Citation:- 2016 (331) E.L.T. 355 (Guj.)
 
Brief facts:- The appellant-Commissioner of Central Excise and Customs, in this appeal under Section 35G of the Central Excise Act, 1944 (hereinafter referred to as ‘the Act’) has challenged the order dated 2nd January, 2014 passed by the Central Excise and Service Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’) in Appeal No. E/13793/2013, by proposing the following three questions stated to be substantial questions of law :
“(1)      Whether Tribunal committed error in following law settled by Hon’ble High Court of Gujarat reported at 2012 (276)E.L.T.9 (Guj.) = 2013 (29)S.T.R.208 (Guj.) in the case of NBM Industries, though factual and legal aspects in the present case are quite different?
(2)        Whether DTA unit clearing the goods to 100% EOU can be termed as export, allowing DTA unit to claim refund of unutilised Cenvat credit?
(3)        Whether Tribunal committed error in interpreting provisions of Rule 5 of Cenvat Credit Rules, 2004?”
The issue involved in this case is regarding refund of the Cenvat credit availed by the respondent assessee on the inputs/input services/capital goods which were utilised and consumed in manufacturing of goods which were cleared to a 100% Export Oriented Unit (EOU) without payment of duty on ARE-1/ARE-3 and CT-3 certificates. The respondent assessee is engaged in the manufacture and clearance of cast articles of alloy steel, stainless steel and other engine parts and also availing Cenvat credit facility under the Cenvat Credit Rules, 2004 (hereinafter referred to as “the Rules”). The respondent filed a refund claim of Rs. 78,05,272/- under Rule 5 of the Rules read with Notification No. 5/2006-C.E. (N.T.), dated 14th March, 2006 for unutilised Cenvat credit (for the period from April, 2010 to March, 2011) lying in balance on account of clearances to a 100% EOU under ARE-3/CT-3 without payment of duty. The Assistant Commissioner, Central Excise, Division-II, Rajkot, issued a show cause notice dated 31st January, 2012, proposing to reject the refund claimed. The show cause notice came to be adjudicated by an Order-in-Original dated 24th May, 2012, whereby the proceedings were dropped in the light of the decision of the Supreme Court in the case of M/s. Shilpa Copper Wire Industries[2010 (255) E.L.T. A15 (S.C.)] and M/s. Amitex Silk Mills Pvt. Ltd. [2010 (254) E.L.T. A98 (S.C.)]. Accordingly, refund to the tune of Rs. 76,98,104/- came to be sanctioned under Section 11B of the Act. The appellant carried the matter in appeal before the Commissioner (Appeals), who allowed the appeal by an Order-in-Appeal dated August 30, 2013. The assessee carried the matter in appeal before the Tribunal and succeeded.
 
Appellant’s contention:-Mr. Y.N. Ravani, learned senior standing counsel for the appellant, submitted that the Tribunal has erred in placing reliance upon the decision of this Court while allowing the appeal of the respondent inasmuch as the same has been rendered in a case where clearances were made from one 100% EOU to another 100% EOU, whereas the present case relates to clearances made by a DTA (Domestic Tariff Area) to a 100% EOU. It was further submitted that the Tribunal has failed to take into consideration the Circular F.No. 267/124/2007-CX.8, dated 24th March, 2008, wherein it has been stated that the DTA units do not physically export the excisable goods but merely supply the goods to 100% EOU. It was submitted that, therefore, the provisions of Rule 5 of the Rules are not applicable and the remedy lies in claiming refund of terminal excise duty from the Ministry of Commerce as per the Foreign Trade Policy and the provisions in the Handbook of Procedures (Vol. 1). In support of his submissions, the learned counsel placed reliance upon the decision of the Madras High Court in the case of BAPL Industries Ltd.v. Union of India, 2007 (211)E.L.T.23 (Mad.), for the proposition that physical export is not a deemed export and the concession granted to the petitioner under Chapter 10 of EXIM Policy is deemed export and not an export and, hence, cannot be extended for local sale to the DTA or local sale made by a 100% EOU to another 100% EOU. It was, accordingly, urged that the appeal requires consideration and is required to be admitted on the questions as proposed or as may be deemed fit by this Court.
 
Respondent’s contention:- None is represented on behalf of respondent.  
 
Reasoning of judgment:-This Court has perused the impugned order passed by the Tribunal as well as the orders passed by the lower authorities and has considered the submissions advanced by the learned counsel for the appellant. As can be seen from the impugned order, the Tribunal has placed reliance upon a decision of this Court in the case of Commissioner of Excise and Customsv. NBM Industries Pvt. Ltd., 2012 (276)E.L.T.9 (Guj.) = 2013 (29)S.T.R.208 (Guj.)and upon appreciation of the material on record has found that the present case stands squarely covered by the said decision and has, accordingly, allowed the appeal preferred by the assessee. A perusal of the above referred decision of this Court reveals that one of the questions raised in the appeal was as to whether 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 unutilised Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rules, 2004. The Court found that the issue involved stood squarely covered by the decisions of the Tribunal in the case of AmitexSilk Mills Pvt. Ltd., Commissioner of Central Excisev. Ginni International Ltd. and Sanghi Textiles Ltd. v. Commissioner of Customs and Central Excise. The Court while taking note of the fact that the appeal against the decision of the Tribunal in the case of Amitex Silk Mills Pvt. Ltd. has been admitted by the Supreme Court, also noticed that the decision of the Tribunal in the case of Ginni International Ltd. [2002 (139) E.L.T. 172 (Tri.-Del.)] was challenged before the Supreme Court and the Court in its decision reported in 2007 (215) E.L.T. A102 (S.C.), while dismissing the Revenue’s appeal against the Tribunal’s order, held that once the Development Commissioner gives permission to the assessee, a 100% EOU, to sell goods in DTA up to a specified value, the Revenue cannot go behind such permission and dispute it holding that for fixing the limit only physical exports and not deemed exports should be taken into account. The Court also took note of the fact that against the decision of the Tribunal in the case of Sanghi Textiles Ltd. v. Commissioner of Customs and Central Excise, the Revenue had preferred appeal before the Supreme Court which came to be dismissed by reiterating what was held in Ginni International Ltd.
Insofar as the decision of the Madras High Court on which reliance has been placed on behalf of the Revenue, the Tribunal found that there was a decision of the jurisdictional High Court directly on the issue and was therefore, bound by it. The Tribunal further observed that the Supreme Court in the case of Virlon Textile Mills Ltd.v. Commissioner of Central Excise, Mumbai, 2007 (211)E.L.T.353 (S.C.), has, though not in an identical situation, while examining the nature of the DTA as well as the 100% export oriented units, observed that the DTA sales against foreign exchange or other supplies in India can be equated with physical exports. Thus, the Tribunal has applied a decision of this Court to the facts of the case and found that the issue stands covered by such decision.
Insofar as clearances from DTA units to 100% export oriented units are concerned, the Tribunal has placed reliance upon the above decision of the Supreme Court wherein it has been held that DTA sales against foreign exchange or other supplies in India can be equated with physical exports. Thus, the Tribunal has merely applied decisions of the jurisdictional High Court as well as the Supreme Court to the facts of the case while holding that DTA unit clearing goods to 100% EOU can be termed as export for the purpose of allowing DTA unit to claim refund of unutilized Cenvat credit. Under the circumstances, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law, much less, a substantial question of law so as to warrant interference.
In absence of any substantial question of law, the appeal fails and is, accordingly, summarily dismissed.
 
Decision:- Appeal dismissed
 
Comment:- The case is related to allowance of refund in respect of unutilized Cenvat Credit under rule 5 of Cenvat Credit Rules, 2004 in the case when DTA unit clears the goods to 100% EOU.Goods cleared to 100% EOU unit is consider as deemed export. The High Court held that DTA unit entitled to claim refund of unutilized Cenvat credit.

Prepared by:- Monika Tak  
 
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com