Whether refund under rule 5 admissible when assessee cleared intermediate goods to 100% EOU?

PJ/CASE LAW/2016-17/3122

Case:- M/s LAKSHMI AUTOMATIC LOOM WORKS LTDVs COMMISSIONER OF CENTRAL EXCISE, COIMBATORE

Citation:-2016-TIOL-890-CESTAT-MAD

Brief facts:-The brief facts of the case was that the intermediate goods were cleared by the appellant to the EOU and such goods having undergone processing by EOU resulting in output that was exported by that EOU Whether shall disentitle the appellant to refund of Unutilized Credit under Rule 5 of the CENVAT Credit Rules, 2004.

Appellant’s contention:-The precise question of learned counsel was that when the intermediate goods were cleared by the appellant to the EOU and such goods having undergone processing by EOU resulting in output that was exported by that EOU Whether shall disentitle the appellant to refund of Unutilised Credit under Rule 5 of the CENVAT Credit Rules, 2004. He said that the answer should be in favour of the assessee for the reason that even the intermediate goods can be exported without payment of duty as covered by the said Rule. That rule having undergone amendment from 17.3.2012, appellant's claim was undeniable.

Reasoning of judgment:-There was no doubt that Revenue had conceived that the goods cleared by the appellant were intermediate goods and were cleared to EOU. The said EOU after processing that had exported. The finished goods arose out of that. Therefore, the appellant satisfied the condition of Rule 5(1) of CENVAT Credit Rules, 2004 effectuating export of the goods in question through the EOU. However the relief of refund of unutilised credit shall be subject to the working out of the quantum thereof in terms of in the formula prescribed by that Rule. There should be no dispute at all in respect of the calculation of quantum of refund applying the respective formula.

In the result, matter was remanded to the adjudicating authority to calculate the appropriate amount of refund admissible as per the formula prescribed by Rule 5 of CENVAT Credit Rules, 2004 and grant the same to the appellant as expeditiously as possible.

With the aforesaid direction, both the appeals were remanded to the adjudicating authority.

Decision:-Appeal allowed by way of remand.

Comment:- The gist of this case is that as the appellant cleared intermediate goods and were cleared to EOU. The said EOU used the intermediate goods for manufacturing finished goods that were ultimately exported. Therefore, the appellant satisfied the condition of Rule 5(1) of CENVAT Credit Rules, 2004 effectuating export of the goods in question through the EOU. And hence the refund was admissible to the assessee.

Prepared by:- Prayushi Jain

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PJ/CASE LAW/2016-17/3122

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