Whether refund under Rule 5 is available for goods cleared to 100% EOUs?

PJ/CASE LAW/2014-15/2454

Case:-COMM. OF C.E., CUS AND S.T., HYDERABAD-I Vs TECHBOND LABORATORIES (P) LTD

Citation:-2014-TIOL-2100-CESTAT-BANG

Brief facts:-Revenue is seeking stay against the impugned order wherein the learned Commissioner (Appeals) has allowed the refund claims filed within the time limit prescribed under the law by the assessee. As regards the refund claims rejected on limitation, there is no dispute at present. As regards the refund claim filed by the appellants, within the normal period, Revenue is aggrieved by the fact that the Commissioner (Appeals) has allowed the refunds on the ground that clearances to other 100% EOUs which are deemed exports and are not physical exports have to be considered as exports for the purpose of consideration of refund claims under Rule 5 of CCR 2004. The learned A.R. submitted that in the case of Essar Steel Ltd. Vs UOI [2010 (249) ELT 3 (Guj)] = 2009-TIOL-674-HC-AHM-CUS, Hon'ble High Court had taken a view that clearances from Domestic Tariff Area Units to SEZs cannot be considered as exports for the purpose of levy of export duty. Following this ratio, in this case also, the clearances to 100% EOUs cannot be considered as exports.

Appellant’s contention:-The learned A.R. submitted that in the case of Essar Steel Ltd. Vs UOI [2010 (249) ELT 3 (Guj)] = 2009-TIOL-674-HC-AHM-CUS, Hon'ble High Court had taken a view that clearancesfrom Domestic Tariff Area Units to SEZs cannot be considered as exports for the purpose of levyof export duty. Following this ration, in this case also, the clearances to 100% EOUs cannot be considered as exports.

Respondent’s contention:-Nobody is present on behalf of the respondents.

Reasoning of judgment:-The Hon’ble Tribunal find that in this case, the learned Commissioner (Appeals) has relied on the following decisions to come to the conclusion that such refunds have to be allowed even when the exports are deemed exports. The decisions are CCE & C Vs NBM Industries [2012 (276) ELT 9 Guj] = 2011-TIOL-677-HC-AHM-CX. CCE Vs Shilpa Copperwire Industries [2001 (269) ELT 17 (Guj)]. Both these decisions were rendered by Hon'ble High Court of Gujarat and both the decisions are directly on the issue which is under consideration in these appeals. In both cases it was held that refund of CENVAT credit availed on inputs used in the manufacture of goods cleared by DTA units to 100% EOUs would be available and it cannot be denied on the ground that it was a case of deemed export. In view of the fact that both the decisions of the Hon'ble High Court of Gujarat relied upon by the learned Commissioner are on the very same issue and are directly applicable to the facts of this case. No case has been made out for granting stay by the Revenue. Accordingly, the stay applications filed are rejected.

Decision:- Stay rejected.

Comment:- According to Rule 5 of CCR, 2004, refund of CENVAT credit allowed 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 analogy of the case is that refund of accumulated credit is also allowed if the goods are cleared to 100% EOUs. Reliance has been placed on the decisions of the Hon'ble High Court of Gujarat holding that clearances to 100% EOUs which are deemed exports and are not physical exports are also to be considered as exports for the purpose of consideration of refund claims under Rule 5.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2454

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