Whether refund claim is allowed in respect of the unutilised balance of CENVAT credit under rule 5 of Central Excise.

PJ/Case Law /2016-17/3258

Case:-COMMISSIONER OF CENTRAL EXCISE., PUNE-II Versus RADHA KANHAIYA TEXTILE PROCESSORS

Citation:-2016 (336) E.L.T. 654 (Tri-Mumbai)

Brief Facts:-The brief facts of the case are that the respondent assessee engaged in manufacture of textile and filed the refund claim for the period 7-9-2012 for an amount of Rs. 19.49 lakhs in respect of the Cenvat credit remained unutilized when the goods manufactured by them were exported. The adjudicating authority sanctioned the refund claim. Aggrieved by such order, Department preferred an appeal before the first appellate authority. The first appellate authority, after following the due process of law, rejected the appeal filed by the Department.
Appellant Contention:-Learned AR would submit that both the lower authorities were in error in sanctioning the refund claim as the refund claim has arisen out of the unutilized Cenvat credit taken under deemed credit provisions. The claim which has been filed by the respondent on 26-3-2003 and sanctioned by the adjudicating authority in July, 2003 was after rescinding of notification, which granted benefit of deemed credit. It is his submission that the lower authorities were also in error in considering that the refund claims, which should have been filed quarterly and not for two quarters at a time. It is his further submission that the refund claim for quarter ending 31-3-2003 was filed on 21-3-2003 before the quarter ending, which is also not correct. He would submit that the lower authority relying upon the Notification No. 6/2002 and holding that non-filing of refund claim quarterly is procedural infraction is incorrect.
Respondent Contention:-Learned Counsel appearing for the Respondent would submit that identical issue that interpreting the provisions of identical worded notification, the Hon’ble High Court of Gujarat in the case of CCE, Surat-I v. Annapurna Industries Pvt. Ltd. - 2010 (255)E.L.T.197 (Guj.) and in the case of CCE, Surat-I v. Swagat Synthetics - 2008 (232)E.L.T.413 (Guj.) has held in favour of the assessee.
Reasoning of Judgment:-On perusal of the records, we have find that it is not in dispute that the appellants were eligible to avail deemed credit on the inputs procured by them for manufacture of textile and textile articles, during the period Sept., 2002 to Jan., 2003. It is also undisputed that during the relevant period, the appellant had manufactured and exported the goods on payment of duty. We have found that there is no doubt that unutilized Cenvat credit lying in the balance of the Books of the respondent is liable to be refunded to him. No provisions were brought to our notice which indicate that such deemed credit would lapse after rescinding of Notification No. 6/2002. “I have carefully gone through the case records as well as the submissions made by the appellants as well as the respondents. The adjudicating authority has allowed refund claim filed on 26-3-2003 of unutilized balance in the deemed credit account earned by the respondents during the period form 7-9-2002 to 12-1-2003 as per the provisions of Notification No. 53/2001-C.E. (N.T.), dated 29-6-2001 issued under Rule 11 of Cenvat Credit Rules, 2002. I have find that the respondents had filed refund claim on 16-3-2003, but the adjudicating authority sanctioned the refund claim on 16-7-2003, when deemed credit provisions ceased to exist with effect from 1-4-2003. Since the respondents have filed the refund claim in time i.e. when the provisions of Notification No. 06/2002-C.E. (N.T.) were in existence, therefore, the claim has been rightly sanctioned. As regards the contention of the department that the claim was not filed on quarterly basis, the same is only a procedural matter and cannot come in the way of substantive benefit of refund which is otherwise admissible. There is, therefore, no merit in the appeal filed by the Department. In our view the concurrent findings of both the lower authorities that the appellant are eligible to avail Cenvat credit has not been controverted by the Revenue in the grounds of appeal. The grievance of the Revenue seems to be that the respondent had filed the refund claim before the expiry of the quarter ending 31-3-2003 is a non-starter and the assessee can plan his business and can file the refund claim even before the quarter comes to an end. The other grievance of the Revenue that non-filing the return correctly is a procedural lapse as also and non-starter as when there is no dispute as to the fact that the assessee respondent in this case has utilized the inputs in manufacturing and exported the goods, the denial of credit will not be in consonance of the law. The reliance placed by the learned AR on the judgment of the Apex Court are on total different facts wherein interpretation of the exemption notification was being considered by the Apex Court, while in this case the issue is only filing of refund claim for a particular quarter belatedly. Even after such belated filing, the refund claim for a particular quarter is within the period of limitation.

Decision:- The appeals is accordingly is rejected.

Comment:-The gist of the case is that the fact that appellant are eligible to avail Cenvat credit has not been controverted by the Revenue in the grounds of appeal. The grievance of the Revenue seems to be that the respondent had filed the refund claim before the expiry of the quarter ending 31-3-2003 is a non-starter and the assessee can plan his business and can file the refund claim even before the quarter comes to an end.

Prepared by:- Bharat

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PJ/Case Law /2016-17/3258

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