Whether rebate claim be sanctioned by way of credit disputed to be granted in cash?

PJ/CASE LAW/2016-17/3139

Case:-JOHN DEERE INDIA PVT LTD VS COMMISSIONER OF CENTRAL EXCISE, PUNE-III

Citation:- 2016-TIOL-1313-CESTAT-MUM

Brief Facts:-This appeal is directed against Order-in-Appeal No. PIII/VM/84/2011 dated 26/04/2011.The appellant herein is engaged in providing Consulting Engineering Service and has exported the said service by paying the service tax amounting to Rs.7052644/-. After export was done, they filed a rebate claim in terms of Export Service Rules, 2005. Lower authority sanctioned the rebate claim by way of credit to Cenvat account of the appellant.

Appellants Contention:-Appellant is aggrieved by such an order, as according to them, the Cenvat credit cannot be utilized as exports of the services are more than the domestic clearances and rebate claim should be sanctioned to them in cash.

Reasoning Of Judgement:-On careful consideration of the submissions made by both the sides and perusal the records, Tribunal find that Ld. Counsel was correct in emphasizing that the rebate claim should be paid in cash. It is settled law that the debit of an amount in Cenvat account is considered as discharged of tax liability. Our views are fortified by the judgments of Hon'ble High Court of Uttarakhand in the case of Apco Pharma Ltd. - 2015 (319) ELT 641 = 2011-TIOL-913-HC-UKHAND-CX, they reproduce ration contained in para no. 20:
"20. Upon hearing the learned counsel, the Court finds that the adjudicating authority had sanctioned the refund claimed by way of credit in their RG23A Part II account. 20. The Court finds that the assessee is availing exemption and is not in a position to utilize the credit and if the assessee is not able to utilize the credit, the very basis of the refund is defeated. Consequently, the Commissioner (Appeals) was justified in giving the assessee the cash refund of the credit. In Commr. of Cen. Ex. vs. Ashok Arc, 2006 (193) ELT 399 = 2007 (7) STR 365 , the High Court of Jharkhand held that the assessee is entitled for the refund in cash. In view of the aforesaid, the submission of the learned counsel for the appellant cannot be accepted."
In view of the foregoing and in the facts and circumstances of this case, we set aside the impugned order and allow the appeal with consequential relief.

Decision:-Appeal allowed.

Comment:- The essence of the case is that rebate claim should be sanctioned in cash rather than by way of credit to the cenvat account if it is not possible for the exporter to utilise cenvat credit. This is supported by the remarkable judgment of High Court in the case of Apco Pharma Ltd. The rebate sanctioned by way of cenvat credit may prove to be futile if it is not possible to utilise the cenvat credit as the very basis of the refund is defeated.

Prepared By:- Neelam Jain

Comments

PJ/CASE LAW/2016-17/3139

Post a Comment

Query