Whether limitation provided under Section 11B applicable for refund claim of Cenvat Credit under Rule 5?

Case:-COMMISSIONER OF C. EX., COIMBATORE VersusGTN ENGINEERING (I) LTD.

Citation:-2012 (28) S.T.R. 426 (Mad.)

Brief Facts:-The respondent M/s. GTN Engineering (I) Ltd., are the holders of Central Excise Registration and are the manufacturers of valves and parts of valves. They made six individual refund claims invoking Rule 5 of CENVAT Credit Rules, 2004 for refund of Cenvat credit of duty paid on inputs and capital goods, which were used in the manufacture of valves exported.
By six individual orders-in-original, the original authority accepted the claim of the revenue in respect of the of three claims on the ground that the credit inputs received after the export clearance are not eligible for refund and accordingly rejected the same. Insofar as the other three claims, the Assistant Commissioner of Central Excise, Customs & Service Tax, rejected the claims on the ground that they are time-barred.
These orders were taken on appeal before the Commissioner (Appeals), Coimbatore, who, by a common order, held that all the six claims were time-barred and on that ground, all the six appeals were rejected as devoid of merits and the orders of the lower authority were sustained. Being aggrieved by the above order, the assessee preferred appeals before the Customs, Excise and Service Tax Appellate Tribunal, which set aside the orders of the authorities below and remanded the matter for fresh consideration in the light of the directions made therein. Against the order of the Appellate Authority, these appeals are filed by the Commissioner of Central Excise, Coimbatore to the High Court.

Appellant’s Contention:-Appellant submitted that though the provisions of Section 11B of the Central Excise Act, 1944, entitles any person to claim refund of any duty of excise and interest, if any, paid on such duty, by itself is not applicable to the claim of refund of CENVAT credit. To get over the same, Rule 5 of CENVAT Credit Rules, 2004, provides for such refund of CENVAT credit. By that rule, the Central Government is empowered to issue Notification for making claim for such refund. Accordingly, in terms of the said rule, relevant notification was issued and Clause 6 of the Appendix contemplates that the claim could be entertained only on compliance of the period of limitation prescribed under Section 11B of the Central Excise Act. On the ground that in all these cases, claims have been made beyond the period of limitation, the Commissioner (Appeals) has rightly rejected all the six claims of the respondent. The said order has been interfered by the CESTAT by holding that as per Rule 5, no period of limitation could be prescribed in the absence of the notification by the Central Government as to the relevant date. This finding of the Tribunal is contrary to the provisions of the Act and Rules and the notification made thereunder. The appellant further submits that in any case, in the absence of sufficient materials produced before the authorities, the rejection of the claim for refund is well justified and the Tribunal ought not to have remanded the matter for that reason.

Respondent’s Contention:-Respondent submits that though the provisions of Section 11B is not strictly made applicable to the refund of CENVAT credit, as it applies only for the claim of duties and interests if any, paid on such duty, in the wake of the provisions of sub-rule (5) and the notification as such, claims could be made. Nevertheless, in the absence of any notification in regard to the relevant date as defined in Section 11B (5)(B) of the Act, the rejection of the claim for refund on the ground of period of limitation is bad.
The respondent would rely upon a judgment of the Gujarat High Court reported in 2008 (232)E.L.T. 413 (Guj.) [Commissioner of Central Excise and Customs, Surat-I v. Swagat Synthetics] and Judgement of Madhya Pradesh High Court at Indore reported in 2009 (236)E.L.T. 248 (M.P.) [STI India Ltd. v. Commissioner of Customs and Central Excise, Indore].

Reasoning of Judgement:-Tribunal has considered the submissions made from both sides. It deemed necessary to refer the relevant portion in Section 11B of the Central Excise Act, 1944, which 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 any, paid on such duty may make an application for refund of such [duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of [duty of excise and interest, if any, paid on such duty] in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such [duty or interest, if any, paid on such duty] had not been passed on by him to any other person.”
By that provision, a claim for refund is made available in case of refund of duty and interest, if any paid on such duty and as far as that provision is concerned, there is no dispute that it is applicable only in case of duty paid and not on the CENVAT credit facilities.
Rule 5 of the CENVAT Credit Rules, 2004, entitles for making claim for refund of CENVAT credit and the relevant portion of the said rule reads as under :
“RULE 5 Refund of CENVAT credit. - Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking as the case may be, or used in the intermediate product 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 product 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 or provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification.”
In terms of the said rule, the Central Government should notify as to the safeguards, conditions and limitations. Accordingly, Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 has issued. Clause 6 appendix to the notification reads as under:-
“6. The application in Form A, along with the prescribed enclosures and the relevant extracts of the records maintained under the Central Excise Rules, 2002, CENVAT Credit Rules, 2004, or the Service Tax Rules, 1994, in original are filed with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, before the expiry of the period specified in Section 11B of the Central Excise Act, 1944 (1 of 1944)”.
The said notification prescribes a period of one year, as provided under section 11B of the Central Excise Act, for the purpose of making application in Form-A along with prescribed enclosures and also the relevant extracts of the records maintained under the Central Excise Rules, 2002, Cenvat Credit Rules, 2004 or Service Tax Rules, 1994 in original. For the purpose of finding out as to the “relevant date” for the purpose of making claim for refund of CENVAT credit, Rule 5 should be made applicable.
It is the contention of the respondent (assessee) that the provision defining relevant date does not cover the claim for refund of CENVAT credit. But it is point out that when a statute empowered for such claim, the said provision must be read to find out as to the relevant date. Rule 5 specifies that “where any input or input service is used in the manufactures of final product which is cleared for export under bond or letter of undertaking as the case may be, or used in the intermediate product 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.”
A reading of the above rule, though there is no specific relevant date is prescribed in the notification, the relevant date must be the date on which the final products are cleared for export. If any other conclusion is arrived, it will result in disentitling any person to make a claim of refund of CENVAT credit. Admittedly, the respondent has made a claim only invoking Rule 5 of the CENVAT Credit Rules, 2004. In that view of the matter, the relevant date should be the date on which the export of the goods was made and for such goods, refund of CENVAT credit is claimed.

The respondent would rely upon a judgment of the Gujarat High Court reported in 2008 (232)E.L.T. 413 (Guj.) [Commissioner of Central Excise and Customs, Surat-I v. Swagat Synthetics]. That was a case relating to sub-rule (13) of Rule 57F of Central Excise Rules, 1944, which reads as under :
“(13) Where any inputs are used in the final products which are cleared for export under bond or used in the intermediate products cleared for export in according with sub-rule (4), the credit of specified duty in respect of the inputs so used shall be allowed to be utilised by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty 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 in the Official Gazette.”
The said rule does not prescribe any time-limit. In the absence of such prescription as to the limitation, the Gujarat High Court has held that the claim of refund could not be rejected on the ground of limitation.
Further respondent also relied upon theJudgement of Madhya Pradesh High Court at Indore reported in 2009 (236)E.L.T. 248 (M.P.) [STI India Ltd. v. Commissioner of Customs and Central Excise, Indore].
In that case, though the Court has held that Clause 6 of Appendix read with Section 11B of Central Excise Act, 1944, cannot be made applicable insofar as the period of limitation is concerned when a claim for CENVAT credit is made, a reading of the said provision shows that there is no reference to Rule 5.
With great respect, the Tribunal was not in agreement with the said judgment as this judgment was rendered based on the rules and the notification which are procedural in nature. It was found that but for the provision of Rule 5 r/w notification, the respondent could not have filed the application for refund, he has to satisfy the limitation clause as provided under Section 11B of the Act.
In view of the above, the order of CESTAT holding that the limitation is not applicable to the facts in question to the case has to be set aside. As far as the remand is concerned, in view of the above findings, the matter has to be remitted back, as directed by the CESTAT for the simple reason that the respondents should be given an opportunity to produce the materials in support of their claim. This remittal is applicable only to the refund orders other than those declared as time barred.

Decision: -The order of CESTAT holding that the limitation is not applicable is set aside. Appeal disposed off.

Comment:-The analogy drawn from this case is that limitation of filing refund claim within one year from the relevant date is applicable for the refund of cenvat credit filed under Rule 5 of the CCR, 2004. The relevant date in such cases would be thedate on which the final products are cleared for export.

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PJ/Case Laws/2012-13/1354

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