Whether time limit prescribed under Section 11B is applicable for refund of accumulated credit under Rule 5 of CER, 2002?

Case:-M/s DEEPAK SPINNERS LTD Vs COMMISSIONER OF CENTRAL EXCISE, INDORE

Citation:- 2014-TIOL-63-CESTAT-DEL

Brief Facts:-The appellant are manufacturers of yarn. The period of dispute in this case is from April 2002 to June 2002. The appellant were availing of Cenvat credit of Central Excise duty paid on inputs used in or in relation to the manufacture of their final products. Since, during the period of dispute, the appellant could not utilise the Cenvat credit accumulated due to clearances for export under bond under Rule 19 of the Central Excise Rules, they filed an application for cash refund of the accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2002. This application for the quarter from April 2002 to June 2002 was made on 17/06/2003. The Jurisdictional Assistant Commissioner vide order-in-original dated 24/12/2003, sanctioned the refund claim of only Rs. 14,93,835/- for the period from 17/06/2002 onwards and rejected the refund claim of Rs. 45,06,706/- in respect of exports made prior to 17/06/2002, on the ground that the refund claim in respect of exports made prior to 17/06/2002 is time barred, in as much as in terms of the Notification No.11/2002-CE (NT) dated 1/3/02 issued under Rule 5 of the Cenvat Credit Rules, 2002, the application for cash refund of accumulated Cenvat credit is required to be filed to the Assistant Commissioner/Jurisdictional Deputy Commissioner before the expiry of the limitation period in the Section 11B of the Central Excise Act. On appeal to Commissioner (Appeals), this order of the Assistant Commissioner was upheld vide order-in-appeal dated 19th April 2004. Against this order of the Commissioner (Appeals), this appeal has been filed.

Appellant Contentions:-The learned Counsel for the appellant, pleaded that the issue involved in this case - whether the limitation period prescribed under Section 11B is applicable for the refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2002, stands decided in the appellant's favour by the judgment of Hon'ble Madhya Pradesh High Court in the case of STI India Ltd. vs. CCE, Indore reported in2009 (236) ELT. 248 (M.P.) wherein in para 6 of the judgment, while interpreting similar provision in the Notification issued under Rule 57F of the Central Excise Rules, 1944, Hon'ble High Court held that the strict law of limitation provided in Section 11B of the Central Excise Act would not apply to the claim of refund claimed under the notification issued under Rule 57F and that the notification is procedural in nature rather than mandatory, that since the appellant falls within the jurisdiction of Hon'ble Madhya Pradesh High Court, this judgment is squarely applicable to this case, that same view has been taken by the Tribunal in the case of Elcomponics Sales Pvt. Ltd. vs. CCE, Noida reported in 2012 (279) E.L.T. 280 (Tri. -Del.) and also in the case of Global Energy Food Industries vs. CCE, Ahmedabad reported in 2010 (262) ELT. 627 (Tri. - Ahmd.) = (2010-TIOL-337-CESTAT-AHM), and that in view of this, the impugned order is not sustainable.

Respondent Contentions:-The defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it and citing the judgments of the Tribunal in the case of CCE vs. Fort William Co. Ltd. reported in 1989 (43) E.L.T. 339 (Tribunal) and also in the case of Sara Services & Engineer Pvt. Ltd. vs. CCE, Meerut - I reported in 2010 (254) E.L.T. 486 (Tri. - Del.) = (2010-TIOL-528-CESTAT-DEL), pleaded that in the later judgment, it has been held that wherever the law prescribes a limitation period, it has to be applied strictly and that in construing the provision of limitation the consideration of equity are irrelevant and immaterial and in applying them, effect must be given to strict grammatical meaning of the words used by them. He further pleaded that since the notification issued under Rule 5 of the Cenvat Credit Rules provides that the claim for cash refund under Rule 5 of the Cenvat Credit Rules must be filed within the period of limitation prescribed under Section 11B, this limitation period has to be strictly observed and the 'relevant date' for counting the limitation period for Rule 5, cash refund would be the date of export. He, therefore, pleaded that there is no infirmity in the impugned order.

Reasoning of Judgment:-After carefully considering the submissions from both the sides and perusing the records, it was observed that Rule 5 of the Cenvat Credit Rules, 2002 provides for cash refund of the Cenvat credit accumulated due to clearances for export of goods under bond without payment of duty under Rule 19 of the Central Excise Rules, and which could not be utilised for payment of duty by the assessee on clearance of home consumption. In terms of the provisions of this Rule, the cash refund is subject to the procedure being followed and conditions being fulfilled in the notification issued by the Central Government in this regard. During the period of dispute, Notification No.11/2002-CE (NT) dated 01/3/02 prescribed the procedure laying down the safeguards, conditions and limitations. Clause 6 of this notification provides that 'The application in Form A alongwith the proof of due exportation and the relevant extracts of the records maintained under the said rules or the deemed credit register maintained in respect of textile fabrics, as the case may be, in original, are lodged 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". Earlier in Rule 57F of Central Excise Rules, 1944 also, there was an identical provision and in terms of Rule 57F, a similar notification had been issued which also had a similar provision providing that all the claims for cash refund of accumulated Cenvat credit must be filed before the expiry of period specified in Section 11B. In this case, admittedly the application for cash refund under Rule 5 in respect of exports made during April 2002 to June 2002, had been filed on 17/6/03 and, as such, according to the department, the cash refunds of accumulated Cenvat credit in respect of export during the period prior to 17/6/02 is time barred. Thus, the basic point of dispute in this case is as to whether the limitation period prescribed under Section 11B would be applicable for cash refund under Rule 5 of the Cenvat Credit Rules, 2002. It was found that on this very issue Hon'ble Madhya Pradesh High Court in the case of STI India Ltd. vs. CCE, Indore (supra) in para 6 of the judgment has held that the strict law of limitation provided in Section 11B of the Central Excise Act would not apply to the claim of refund claimed pursuant to notification issued under Rule 57F. In this regard para '6' of this judgment is reproduced below:‑
"6. It is not in dispute that claim for the quarter October, 1998 to December 1998 was made on 27/7/99 by invoking Clause 6 of the Appendix to notification issued under Rule 57F. In our view, the strict law of limitation provided in Section 11B of the Central Excise Act would not apply to the claim of refund claimed pursuant to notification issued under Rule 57F. It is, in our opinion, procedural in nature rather than mandatory (see AIR 1992 SC 152). In this case, what was required to be seen by the authorities was whether appellant had submitted along with application all necessary proof regarding exportation of goods and relevant extracts of form R.G. 23A or deemed credit register maintained in respect of textile fabrics in original as the case may be as provided in Clause 6 of Appendix to notification issued under Rule 57F. Once the appellant (Assessee) was able to satisfy these requirements to the satisfaction of authority concern then they were entitled to claim the refund of duty paid on inputs".
In my view the judgment of Hon'ble Madhya Pradesh High Court is squarely applicable to this case, more so when the appellant falls within the jurisdiction of Hon'ble Madhya Pradesh High Court. This judgment has been followed by Hon'ble Gujarat High Court in the case of CCE, Surat - I vs. Swagat Synthetics reported in2008 (232) ELT. 417 (Guj.) = (2008-TIOL-666-HC-AHM-CX) and also by the Tribunal in the case of Elcomponics Sales Pvt. Ltd. vs. CCE, Noida (supra) and Global Energy Food Industries vs. CCE, Ahmedabad (supra).
Learned Jt. CDR has cited the judgment of Tribunal in the case of Sara Services & Engineer Pvt. Ltd. vs. CCE, Meerut -I (supra) and CCE vs. Fort William Co. Ltd. (supra), wherein it has been held that the provisions of limitation must be strictly construed and the equity considerations are immaterial and irrelevant in applying the same. However, in this case, on going-through the notification, it is found that the para 6 of the Notification No. 11/2002-CE (NT) dated 1/3/02 issued under Rule 5 of the Cenvat Credit Rules, 2002, simply provides that the application for cash refund of accumulated Cenvat credit is required to be filed to the Assistant Commissioner/Jurisdictional Deputy Commissioner before the expiry of the period in the Section 11B of the Central Excise Act. It does not mention any relevant date. The only place where the "relevant date" is defined is in Explanation B to Section 11B, the clause (a) of which defines 'relevant date' with regard to export rebate as under:‑
"relevant date" means, -
(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods,-
     I.        if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or
    II.        if the goods are exported by land, the date on which such goods pass the frontier, or
III.        if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;"
Other clause of Explanation 'B' to Section 11B are not relevant.
On perusal of Explanation B of Section 11B giving definition of "relevant date" in respect of claims for refund of excise duty on the goods exported out of India, it is seen that this definition of 'relevant date' is applicable only in respect of rebate claim available on export of goods out of India. However, cash refund under Rule 5 of the Central Excise Rules is not a rebate or refund of the duty paid on excisable goods exported out of India or excise duty paid on input used in manufacture of the goods exported out of India. The refund under Rule 5 is the cash refund of Cenvat credit accumulated due to export of goods without payment of duty under bond or LUT, which cannot be used by a manufacturer for payment of duty on clearances for home consumption and thus this refund claim depends not only upon the accumulation of Cenvat credit due to clearances without payment of duty for export under bond or LUT, but also on the inability to manufacturer to use the accumulated credit for payment of duty on domestic clearances. Unlike export rebate under Rule 18 of the Central Excise Rules, 2002, where an exporter becomes eligible for rebate immediately after export, for cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rule 2002/2004, a manufacturer does not become eligible immediately after export but he has to make an attempt to utilise the Cenvat credit accumulated due exports under bond/LUT for payment of duty on clearance for home consumption. Therefore, the definition of 'relevant date' as given in clause (a) of Explanation B to Section 11B in respect of export rebate claims, cannot be applied to Rule 5 refund claim. There is no other clause of Explanation B to Section 11B which is applicable to the refund claims under Rule 5 of the Cenvat Credit Rules. A limitation prescribed in law always has two components - the period of limitation during which the application is to be filed or something is to be done and the date from which the limitation period is to be counted. Without prescribing the relevant date, a statutory provision prescribing limitation period is meaningless. Since, the second component of the limitation i.e. the relevant date from which the limitation period is to be counted is missing in Clause 6 of the Notification No.11/2002-CE (NT) dated 1/3/02, in my view the limitation provision in this notification is meaningless. The judgment of this Tribunal in the case of Sara Services & Engineer Pvt. Ltd. vs. CCE, Meerut - I (supra) and CCE vs. Fort William Co. Ltd. (supra) would not apply as in this case, the provision of limitation is incomplete. In view of this, the impugned order is not sustainable. The same is set aside. The appeal is allowed.

Decision:-Appeal allowed.

Comment:-The essence of this case is that there is no time limit for filing the refund of accumulated credit under Rule 5 of the CER, 2002 because there is no relevant date specified for filing the refund claims under Rule 5. Thedefinition of 'relevant date' given in section 11B is applicable only in respect of rebate claim available on export of goods out of India. Hence, the definition of 'relevant date' as given in clause (a) of Explanation B to Section 11B in respect of export rebate claims, cannot be applied to Rule 5 refund claim. Moreover, the appeal was allowed for the reason that the relevant date from which the limitation period is to be counted is missing in Clause 6 of the Notification No.11/2002-CE (NT) dated 1/3/02, and so the limitation provision mentioned in the notification is meaningless.

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