PJ/Case Study/2013-14/90
 
 

Case Study

Prepared by:- CA Neetu Sukhwani &

Kushal Shah

 
Introduction: M/s. Raj polymers & chemicals (100% EOU) (A Unit of Rajasthan Gum Pvt, Ltd.) (Here in after referred to as "the assessee" also) engaged in the manufacture of Guar Gum powder falling under Chapter 13 of the First Schedule to the central Excise Tariff Act. They export their products and so regularly file refund claim under Rule 5 of the Cenvat Credit Rules, 2004 as they have accumulated credit that is not possible to utilise. The provisions of the filing of refund claim under Rule 5 were earlier governed by notification no. 5/2006-CE (NT) dated 14.03.2006 which was superseded by notification no. 27/2012-CE (NT) dated 18.06.2012 amending certain conditions for filing the refund claim. Among the amended conditions, one was filing of the refund claim quarterly and the other was requirement of debiting the cenvat credit account with the amount of refund claim before filing the refund claim. However, as the assessee was unaware of the change in the notification, they continued to file their refund claims monthly as per the conditions of the old notification. Consequently, a series of show cause notices were being issued to them proposing to recover the refund claim already sanctioned to them in contravention of the conditions of the amended notification. This case study pertains to one such show cause notice issued to them and its outcome.     
 

M/S. RAJ POLYMERS & CHEMICALS 

[SCN NO.V (RFD)18/108/2013/PT./11016 DATED 05.11.2013]

 
 
Relevant legal provisions:

Rule 5 of the Cenvat Credit Rules, 2004

Notification no. 5/2006-CE (NT) dated 14.03.2006
 
Notification no. 27/2012-CE (NT) dated 18.06.2012 prescribing the safeguards, conditions, limitations and procedure to be followed for claiming refund under Rule 5 of the Cenvat Credit Rules, 2004.
 
Issue involved:The issue involved before the adjudicating authority in this case was that-
Whether filing of refund claims under Rule 5 monthly instead of quarterly be reason to recover refund already sanctioned? 
 
Brief facts:- This order is being passed in pursuance to the Show Cause Notice issued to M/s. Raj polymers & chemicals (100% EOU) (A Unit of Rajasthan Gum Pvt, Ltd.), E-188-189, Agro Food park, Boranada, Jodhpur (here in after referred to as "the assessee" also) engaged in the manufacture of Guar Gum powder falling under Chapter 13 of the First Schedule to the Central Excise Tariff Act, 1985 having registration AAACR8I51NXMOO2.
 
During the course of post-audit of refund claim filed under Rule 5 of Cenvat Credit Rule, 2004 read with notification no.2712012 CE (NT) dated 18.06.2012, it was noticed that the assessee had not filed the refund claim under proper notification and without following proper procedures which resulted in erroneous refund sanctioned to them.
 
The notification no. 5/2006-CE (NT) dated 14.03.2006 was in existence/effective only up to 17.06.2012 and from 18.06.2012 onwards the same was superseded vide notification no.27/2012 CE (NT) dated 18.06.2012. Therefore, safeguards, conditions and limitations prescribed under notification no. 27/2012 CE (NT) dated 18.06.2012 was to be followed by the claimant.
 
As per notification no. 27/2012 CE (NT) dated 18.06.2012, Refund of CENVAT Credit under rule 5 of the said rules, shall be subjected to the certain safeguards, conditions and limitations. One such condition is that the manufacturer or provider of output service shall submit not more than one claim of refund under this rule for every quarter with the exception that a person exporting goods and service simultaneously may submit two refund claims, one in respect of goods exported and other in respect of the export of services every quarter. Further, in this notification, the quarter has been specified to mean a period of three consecutive months with the first quarter beginning from 1^st April every year. Moreover, there is also a condition that the amount claimed as refund under Rule 5 of the said rules shall be debited by the claimant from his Cenvat Credit account at the time of making the claim.  
 
However, the assessee filed the refund claim for the month of May, 12 on 30.04.2013, by following the procedure prescribed / set out in the Appendix to notification no. 5/2006-CE(NT) dated 14.03.2006 instead of procedure prescribed under notification no. 27/2012 CE(NT) dated 18.06.2012. As per notification no. 27/2012 CE (NT) dated 18.06.2012 the assessee was required to submit, not more than one claim of refund, under this rule 5, for every quarter. But the assessee submitted refund claim on monthly basis.
 
The assessee was also required to debit the amount claimed as refund under rule 5 of the said rules from his CENVAT credit account at the time of making the claim. But the assessee also failed to do so.
 
Moreover, the assessee had been filing application for refund under rule 5 on monthly basis continuously, which show that the assessee has intentionally and knowingly mis-stated the facts, while filing the refund claims, which resulted in erroneous sanction of refund claim.
 
Therefore, it appeared that the claim filed by the assessee and sanctioned erroneously vide order-in-original no. 136/2013-R dated 05.07.2013, was liable to be rejected. Hence, M/s. Raj polymers & chemicals (100% EOU) was called upon to show cause and explain as to why the refund claim sanctioned erroneously vide order-in-original (as mentioned above) by the Deputy commissioner, Central Excise Division, Jodhpur, should not be recovered from them under Section 11 A (1) of the Central Excise Act, 1944 along with interest under Section 11AA of the central Excise Act. 1944.
 
Assessee Contentions:The assessee made the following submissions before the adjudicating authority:-

1)            They submit that They are the 100% EOU engaged in the manufacture and export of guar gum powder falling under chapter 13 of the First Schedule to the Central Excise Tariff Act, 1985. They have filed the refund of unutilized credit under rule 5 of the Cenvat Credit Rules, 2004 which has been granted to them vide above referred order in original.
 
2)            They submit that the impugned show cause notice has been issued to recover the refund already granted to them on the basis of the allegation that They have not followed the procedure set out in the notification no. 27/2012-CE(NT). The following allegations have been raised in this regard:-
 
·         That they have submitted the refund claim on monthly basis while they were supposed to file the same on quarterly basis.
·         That they were supposed to debit the amount claimed as refund under the rule 5 of the said rules from the Cenvat Account at the time of claiming the refund.
·         That they had been filing the application for refund under rule 5 on monthly basis continuously which show that there was misstatement of facts while filing the refund claim which was done intentionally and knowingly which resulted in erroneous sanction of refund claim.
 
The above are the only allegations raised in the impugned show cause notice. The analysis of these contentions makes it clear that these are merely procedural lapses and there was no benefit by not following the same; therefore, the allegation of suppression/misstatement is not sustainable. In this regard, it is submitted that they were not aware of the fact that the notification no. 5/2006 has been rescinded, so they continued to follow the same. However, some of the conditions /procedural aspects of the new notification no. 27/2012-CE(NT) were liberalizing the conditions mentioned in the old notification no. 5/2006-CE(NT). In this respect it is submitted that the new notification provided the filing of refund claim on quarterly basis instead of monthly basis. If they were aware of the same, they would have also filed the claim on quarterly basis and it would have been more cost effective and much time would have saved. There was no gain by not following this condition as they would have benefitted by following this condition of the new notification. The mistakes done by the assessee from which nothing cannot be gained; cannot be said to be intentional as the assessed do not gain anything as a consequence, rather he has to face the departmental proceedings. In this regard, reliance is placed on the following case laws:-

·         EMIRATES SHIPPING AGENCIES (I) PVT. LTD. Versus C.C., (EXPORT), NHAVA SHEVA [2009 (243) E.L.T. 689 (Tri. - Mumbai)]

Penalty - Export procedure, non following off - Loading without ‘Let Export Order’ - Advancement of scheduled date of berthing and sailing of ship - Exporter having no knowledge about same, not being informed by shipping line, but filing shipping bill before those dates - As shipping line loaded container without knowledge of exporter, they could not be made liable to penalty for not taking steps for stopping of loading - It was more so as they did not stand to gain anything as goods were neither prohibited nor subject to duty, and it was not a case of misdeclaration - Also, it was not a case where exporter deliberately acted in defiance of law - Sections 40 and 114 of Customs Act, 1962. - The exporter never instructed or pressurized or induced the Shipping Line or the CHA to cause loading of the containers without the permission of the proper officer. There is no evidence of any incriminating conduct against the exporter. There is no implicatory allegation in the show cause notice against them. [paras 5, 6, 7, 8]

·         COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH Versus STEEL STRIPS LTD. [2009 (234) E.L.T. 613 (H.P.)]

Cenvat/Modvat - Inputs not entered in statutory records i.e. RG-23A(I) but in RG23A(II) - Assessee committed a mere procedural irregularity and will not gain anything by making entry in Part I instead of Part II - Assessee can claim credit only if entry is in the register and he fulfils all other conditions laid down - Credit allowed - Rule 57G of erstwhile Central Excise Rules, 1944 - Rule 9 of Cenvat Credit Rules, 2004. [paras 9, 10]

·         COLLECTOR OF CENTRAL EXCISE Versus ASIA INSULATED WIRES (P) LTD. [1992 (62) E.L.T. 812 (Tribunal)]

Reference to High Court - Non-inclusion of inputs in declaration under Rule 57G of Central Excise Rules, 1944 not amounts to suppression especially when Department aware of assessee’s Modvat intention from RG 23A and RT 12 declaration - Demand restricted to six months only in such cases - No question of law arises for reference - Rule 57-I ibid Sections 11A, 35G of Central Excises and Salt Act, 1944.

- Non-inclusion of inputs in Rule 57G declaration is not a case of suppression. The special treatment provided against suppression by way of longer time limit for the issue of demand will arise, if, by such suppression, the department was prevented from getting to know the facts for issuing a notice in time which they could do only on coming to know later about suppression. The department was made aware of assessee’s Modvat intention by their mention in classification list as well as by their RG 23A and RT12 declaration. It is nobody’s case that the respondents got any benefit by such non-inclusion which they could not have got if they had declared the full details. In fact, by non-inclusion of the inputs in question they did not stand to gain anything but on the contrary, made their position vulnerable. But this vulnerability can be only to the extent of a demand for the normal period of six months. In view of this clear position, no question of law arises for reference to High Court. [paras 6-8]

In the above referred cases, the demand was raised on the assessees on account of procedural lapses. However, the appeals in the above referred cases have been decided in favour of assessees by holding that the assessee did not gain anything by doing such procedural mistakes. In the instant case also, the impugned show cause notice has been raised on the basis of allegation that they had filed the refund claim on the monthly basis but the same was supposed to be filed on quarterly basis. They did not gain anything by filing the refund claim on quarterly basis, rather there is extra exercise in filing the refunds each month also leading to increase in some direct and indirect costs. Therefore, the benefit of these cases should be extended to them and the impugned show cause notice demanding the recovery of refund claim already sanctioned should be set aside.

3)            In continuation to above it is submitted that there are a number of decisions wherein delay in filing of appeal was condoned on the grounds that the assessee did not benefit by delaying the appeal filing, rather there is fear of dismissal. This has been decided in the following cases:-

·         SCAN COMPUTER CONSULTANCY Versus UNION OF INDIA [2006 (204) E.L.T. 43 (Guj.)]

Appeal - Restoration of - Dismissal of appeal on grounds of non-compliance of pre-deposit not permits appellate authority to refuse to restore appeal upon compliance being shown. - By mere default in making deposit as directed, the appellant does not stand to gain anything and only delays his right to have his case adjudicated. Nor does such a delay in making pre-deposit cause any prejudice to the revenue, in absence of any stay operating in favour of the petitioner. It cannot be lost right of that right of appeal is statutorily granted and it is hedged in by the requirement to make pre-deposit as directed by the appellate authority, as being a condition for hearing of the appeal on merits. However, that condition cannot be used by the appellate authority for the purposes of denying an appellant the right of adjudication which is otherwise statutorily granted. In a given case, even if no pre-deposit is made, the appeal may not be heard, but having dismissed the appeal for non-compliance of pre-deposit does not permit the appellate authority to refuse to restore the appeal upon compliance being shown. In the circumstances, the appeals is restored. [AIR 1988 Guj. 218 relied on]. [paras 10, 11]

·         MUNICIPAL CORPORATION, GWALIOR Versus RAMCHARAN (D) BY LRS. [2002 (142) E.L.T. 275 (S.C.)]

Appeal - Limitation - Delay of 39 days in filing appeal - Condonation of - Fault allocated to Appellant’s Counsel - Municipal Corporation failed to appear before lower Appellate Court when the appeal was heard, on account of some confusion in noting the date of hearing - Belated knowledge of judgment and decree of the appellant Court - Affidavits by the Revenue officers and Counsel filed before High Court - Council and Corporation not going to gain anything by absenting himself at hearing or by giving false excuse - It is true that sanctity attaches with the record of Court proceedings - However the question is not so much of casting a doubt on the record of proceedings maintained by the Court as is on testing the bona fides of Counsel - Sufficient cause for condoning the delay in filing the appeal - Appeal restored before High Court - Section 5 of Limitation Act, 1963. [paras 3, 4]

·         SHARMA CHEMICALSVersus COMMISSIONER OF CENTRAL EXCISE, CALCUTTA-II [2000 (122) E.L.T. 140 (Tribunal)]

Appeal - Limitation - Delay of 283 days in filing - Condonation of - Managing partner of the firm was under acute medical depression during the relevant period - Usually the assessee does not gain anything by filing the appeal late - Delay in filing the appeal condoned - Section 35B of Central Excise Act, 1944. [para 2]

·         MARGRA INDUSTRIES LTD. Versus COMMR. OF C. EX. & CUS. (APPEALS), MEERUT [2013 (293) E.L.T. 24 (All.)]

Appeal to Appellate Tribunal - Limitation - Condonation of delay - Lenient view ought to be taken - Appellant does not gain anything by not filing appeal - It was more so as delay was due to mistake of counsel who had also filed his personal affidavit - Section 129A(3) of Customs Act, 1962. - Sri Priyadarshi Manish has filed his personal affidavit in which it has been stated that he was representing the appellant in some other case before the Commissioner of Customs (Appeals), New Delhi relating to fulfilment of export obligation against EPCG licence. The papers of the present appeal which was to be filed before the Tribunal was also given by the appellant but, unfortunately by mistake it was kept in that file and subsequently when it was inquired whether the appeal was filed or not, it transpired that the appeal was not filed and the papers were searched and, thereafter, after locating the papers, the appeal before the Tribunal had been filed with some delay. [paras 3, 5, 6]
 
Though the above decisions pertain to Condonation of delay in filing the appeal, yet their ratio is equally applicable in the instant case where we did not gain anything by filing the monthly return rather than quarterly return. Thus, the allegation of intentional misstatement and suppression of facts is not tenable and is liable to be set aside.
 
4)            It is further submitted that they have filed the refund claim after expiry of substantial time. Therefore, there is no loss of Revenue to Government. The departmental stand that they have continued filing the refund claim on monthly basis rather than quarterly basis in order to derive the undue benefit is not sustainable. This is because they have filed the refund claim after expiry of the due date that comes for filing the refund quarterly. This time is even much after the refund becomes due for filing on quarterly basis. Thus, there was no loss of even interest to the Government. For example, for the month of May, 2012, the due date for filing the refund claim quarterly starts from July, 2012. However, they have filed refund claim for the month of May, 2012 on 30.04.2013, i.e. after a substantial period of time. Therefore, the impugned show cause notice alleging the malafide intention is totally unjust and deserves to be quashed.
 
 
5)            It is further alleged in the impugned show cause notice that they did not follow the condition of debiting the Cenvat credit account by the amount of refund claim before filing the said claim. In this regard, it is submitted that the amount of Cenvat Credit which was allowed as refund cannot be utilized otherwise also. They were debiting the amount of credit allowed as refund earlier also. However, the notification no. 27/2012-CE (NT) prescribes that the said debit is to be made at the time of claiming the refund. However, it remains undisputed that they were debiting the amount of credit claimed as refund earlier also and afterwards also. The only difference being the time of debit. However, merely because they made debit entry at some other time, other than prescribed in the notification does not alter the fact that the double benefit of accumulated credit was not taken. Therefore, the difference in the time of making the debit entry (particularly when the same remained unutilized) is merely a procedural lapse which can be condoned. Therefore, the impugned show cause notice is not legally viable and is liable to be set aside.
 
 
6)            Aligning with above it is submitted that beside the above discussed technical lapses that occurred due to non awareness, no other allegation has been raised regarding the factum of export and rightful availment of Cenvat Credit. Thus, the following are the undisputed facts of the case which are not argued in the impugned show cause notice:-
 
·         There was export of goods and the export was done properly while following the prescribed Central Excise and customs procedures.
·         The credit in respect of which the refund was claimed was rightfully availed in terms of Cenvat Credit Rules, 2004.
·         The said inputs/ input services on which credit was availed which was claimed as refund were used for manufacture of export goods. 
 
Thus, the prime condition of allowing the refund which is export of goods and utilization of inputs/input services in course of manufacture of export goods remains undisputed and the impugned show cause notice has been issued merely on the basis of procedural lapses. This has been decided by the hon’ble Supreme Court in the case of MANGALORE CHEMICALS & FERTILIZERS LTD. Versus DEPUTY COMMISSIONER [1991 (55) E.L.T. 437 (S.C.)]that the procedural conditions should not be so rigidly interpreted that they deny the intended benefit to the beneficiaries. Similar decision was given in the following cases:-
 
·         M/s Tablets India Limited v/s Joint Secretary Ministry of Finance [2010-TIOL-652-HC-MAD-CX]:-
 
Central Excise – Export – Rebate – When factum of export id not doubted, rebate cannot be denied even if all the conditions of the notification are not complied with.
 
·         M/s Madhav Steel v/s UOI [2010-TIOL-575-HC-MUM-CX]:-
 
Central Excise – Rebate claim – benefit should not be denied on technical grounds: The Respondent No. 2 has, therefore, erred in concluding that the Petitioners could not prove beyond doubt that the goods cleared on the payment of duty for home consumption, were subsequently exported through shipping bills mentioned in the Order in Appeal dated 22^nd December 2004. As held by the Supreme Court in its decision in the case of Mangalore Chemicals and Fertilisers Limited [2002-TIOL-234-SC-CX], technicalities attendant upon a statutory procedure should be cut down especially, where such technicalities are not essential for the fulfillment of the legislative purpose. The Supreme Court has again held in the case of Formika India v/s Collector of Central Excise [2002-TIOL-599-SC-CX] that the benefit should not be denied on technical grounds: BOMBAY HIGH COURT; 

·         FORMICA INDIA DIVISION Versus COLLECTOR OF CENTRAL EXCISE. [1995 (77) E.L.T. 511 (S.C.)]

Demand consequent upon rejection of claim for non-dutiability - Benefit of exemption notification if any, to be given - Exemption/Set-off of duty subject to following Rule 56A procedure (proforma gate procedure) - Assessee contesting dutiability of the goods produced at intermediate stage and consumed captively - Tribunal holding the assessee liable to pay duty on intermediate goods - Assessee’s claim for benefit of Notification No. 71/71-C.E. turned down on technical ground of non-compliance with the procedure of Rule 56A - Appellate Tribunal order set aside as benefit of Notification No. 71/71-C.E. cannot be denied on technical ground of non-compliance with Rule 56A procedure when the assessee contested the correctness of the classification and dutiability of the intermediate product, thus they could not have ordinarily complied with the procedure of Rule 56A - Sections 5A and 11A of the Central Excises and Salt Act, 1944.
 
·         Modern Process Printers [2006 (204) E.L.T. 632 (G.O.I.)]:-
 
“EXIM - Rebate - Procedural infractions of notification/circular are to condoned if export have taken place actually and substantive benefit should not be denied.”
 

·         FORD INDIA PVT. LTD.  Versus ASSISTANT COMMR. OF C. EX., CHENNAI [2011 (272) E.L.T. 353 (Mad.)]

Rebate claim - Limitation - Inputs cleared as such for export - Claim filed within one year of export but duty paid subsequently - HELD : Rebate claim cannot be denied on technicality - Rule 18 of Central Excise Rules, 2002 - Section 11B of Central Excise Act, 1944. [para 37]
Rebate claim - Procedural requirements - Substantive compliance is sufficient where factum of export is not in doubt - Rebate being a beneficial scheme, it should be interpreted liberally - Rule 18 of Central Excise Rules, 2002. [para 30]
 
 
In the above decisions, it was ruled that the procedural lapses should be the reason to deny the credit where the substantial conditions are satisfied. In the instant case, the substantial conditions of export of goods and rightful availment of credit is not disputed, but the recovery of refund has been proposed merely on account of technical lapses. Therefore, the benefit of above decisions is squarely applicable in their case and alleged procedural lapses should be condoned as the substantial condition of export is being fulfilled. The impugned show cause notice proposing the recovery of refund claim so sanctioned should be quashed and proceedings initiated against them should be dropped.
 
 
7)            It is further submitted that the impugned show cause notice has been issued in respect of the refund claim pertaining to the credit accumulated during the month of May, 2012. However, the same was filed on 30.04.2013. At the time of accumulation of credit, the notification no. 5/2006-CE(NT) was in force and the provisions contained in this notification will be considered for determining the allowability of refund or otherwise. The new notification no. 27/2012-CE (NT) will be applicable only for the credit accumulated after the issuance of this notification. In this regard, it is worthwhile to mention here that a similar type of issue was before the hon’ble Tribunal in case of Service tax refund scheme. To analyze the issue, the facts and circumstances pertaining to it are discussed as follows:-
 
·         Notification no. 41/2007-ST dated 6.10.2007 was issued to grant refund of service tax paid on specified services availed by the exporters which are used in manufacture of export goods.
·         This notification prescribed the time period for filing the refund claim as two months from the date of export.
·         Later on, amendment was made in this notification vide Notification No. 32/2008-S.T., dated 18-11-2008 wherein the period of 60 days was substituted with six months.
·         The assessees tried to avail the benefit of this amendment even for the period prior to November, 2008 in the cases of late filing of refund which was objected by the department.
 
Under above mentioned facts and circumstances, the cases were before hon’ble Tribunal and the hon’ble Tribunal decided that the amendment extending the time limit cannot be applied for the refund claim pertaining to old period/ old quarters, i.e. before November, 2008. Some of such cases are discussed as follows:-

·         LGW LTD. Versus COMMISSIONER OF SERVICE TAX, KOLKATA-I [2010 (19) S.T.R. 825 (Tri. - Kolkata)]

Exemption by refund - Export of goods - Limitation - Refund under Notification No. 41/2007-S.T. rejected as claim filed beyond 60 days - Goods exported during the quarter October 2007 to December 2007 and refund claim filed on 28-4-2008 - Notification No. 41/2007-S.T. amended by Notification No. 32/2008-S.T. increasing time-limit to six months - Amendment not clarificatory in nature and not retrospective - Impugned order rejecting refund on limitation, sustainable - Section 93 of Finance Act, 1994. [paras 2, 4, 5]

·         KALYANI HAYES LEMMERZ LTD. Versus COMMISSIONER OF C. EX., PUNE-III [2013 (30) S.T.R. 71 (Tri. - Mumbai)]

Refund - Exemption to services used in export of goods - Notification No. 41/2007-S.T. - Failure to file claim quarterwise as stipulated in para 2(c) of Notification No. 41/2007-S.T. - HELD : Exemption under Notification operationalised through refund mechanism - Unless condition specified satisfied, claim cannot be entertained - Amendment vide Notification No. 32/2008-S.T. prospective and inapplicable to past refund claims - Also, reference to month of March in C.B.E. & C. clarification, an error apparent on the face - Therefore, benefit cannot be claimed - No merit in appeal - Section 11B of Central Excise Act, 1944 as applicable to Service Tax vide Section 83 of Finance Act, 1994. [para 5]

·         AMEE CASTOR & DERIVATIVES LTD. Versus COMMR. OF C. EX., AHMEDABAD  [2010 (17) S.T.R. 582 (Tri. - Ahmd.)]

Refund - Limitation - Exemption by refund under Notification No. 41/2007-S.T. - Refund claim filed for two quarters beyond 60 days time limit - Notification ibid complete code in itself and provides for time limit of 60 days for filing claim - Time-limit cannot be extended by taking recourse to Section 11B of Central Excise Act, 1944 - Not a simple case of refund of excess tax paid but refund arising out of exemption notification providing for specific mode and procedure for claiming refund of Service tax - Amendment extending time
limit subsequently not clarificatory and effective prospectively only and not applicable to present case - C.B.E. & C. clarification not covering impugned period - Exemption/refund not admissible - Section 93 of Finance Act, 1994. [paras 1, 4, 5

In the above mentioned cases, it was held by hon’ble Tribunal that the service tax refund will be governed by the provisions applicable during the month in respect of which the claim is filed. The provisions applicable on the date of filing the refund claim will be immaterial in such cases. The ratio of these decisions is equally applicable in current case where the department has sought recovery of refund claim on the basis of the conditions specified in the notification no. 27/2012-CE(NT) which was not applicable during the period pertaining to refund claim.  Thus, extending the benefit of these judgments, the impugned proceedings based upon the provisions not existing during the material time are liable to be dropped.
 
8)            In continuation to above, it is submitted that the service tax refund was earlier allowed under notification no. 52/2011-ST dated 30.12.2011. Later on, it was superseded vide notification no. 42/2012-ST dated 29.6.2012. However, while claiming the refund the exporters had referred the Notification applicable during the period for which the refund was filed. For example: for the period prior to June, 2012; refund was filed under the provisions of notification no. 52/2011-ST only even if the same was filed after June, 2012. Also, the refund was duly sanctioned in such cases. This shows that the department has accepted the fact that the notification applicable for the period in respect of which refund is claimed is the correct notification; rather than the notification applicable during the date of filing the refund.  Once department has taken any stand under particular facts and circumstances, it cannot be changed later on under same circumstances. This has been decided in the case of BIRLA CORPORATION LTD. Versus COMMISSIONER OF CENTRAL EXCISE [2005 (186) E.L.T. 266 (S.C.)] that where a particular stand has been taken by department, different stand cannot be taken under similar circumstances. The verdicts of hon’ble Supreme Court are produced as follows:-
 
            “Judicial discipline - Discrimination - When question arising for consideration and facts are almost identical to previous case, revenue cannot be allowed to take a different stand.”
 
Similar decision was given in the following cases:-
 
Ø  JAYASWALS NECO LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NAGPUR [2006 (195) E.L.T. 142 (S.C.)]
 
Ø  COMMISSIONER OF C. EX., HYDERABAD Versus NOVAPAN INDUSTRIES LTD. [2007 (209) E.L.T. 161 (S.C.)]
 
In the above stated cases, it was held that where department has accepted a certain fact, it cannot take any stand contrary to the view taken earlier. The department having jurisdiction over their factory have accepted the fact that the refund will be filed under notification applicable during the period pertaining to refund, rather than the notification prevailing at the time of claiming the refund. So, now totally new stand cannot be taken that the refund is supposed to be filed under notification prevailing at the time of filing of refund. Therefore, the impugned show cause notice issued by deviating from the stand already taken is not sustainable in view of above cited judgments of Supreme Court and is liable to be set aside. 
 
9)            They further submit that the demand/recovery based upon the provisions not existing during the material time are not sustainable in view of the following decisions:-

·         AJMER AUTOMOBILES (P) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2008 (10) S.T.R. 427 (Tri. - Del.)]

Stay/Dispensation of pre-deposit - Order - Revision order - Sustainability of - Impugned order contended as passed exercising suo motu revisional power - Show cause notice issued in terms of provision not existing during material period - Appellant also argued that Service tax paid in impugned case by principal - Fit case for waiver of pre-deposit - Pre-deposit waived - Section 35F of Central Excise Act, 1944 as applicable to Service tax vide Section 83 of Finance Act, 1994. [paras 1, 2]

·         POWDER METALS & ALLOYS LTD. Versus ASSISTANT COLLECTOR OF C. EX., THANE [1994 (71) E.L.T. 230 (Coll. Appl.)]

4.I have considered the submissions. I find that the show cause notice has been issued on wrong premises. This is so because the allegation has been made that the Chapter X procedure is not available to them after 1-3-1986, since the Notification No. 118/75, dt. 30-4-1975 had been rescinded by the Notification No. 186/86, dt. 1-3-1986. The said Notification was very much in force when the goods were received under Chapter X procedure. Therefore, the allegation cannot be sustained. Once, the goods have been received as per the provisions of the Rules and the Notification during the relevant time, the only other requirement is whether the goods are used for the purposes indicated in the Notification. Even though, the said Notification was rescinded, the benefit already allowed earlier cannot be withdrawn, since there is no such provision in the law. Moreover, as the appellants have rightly pointed out, a parallel Notification No. 217/86, dt. 2-4-1986, came to be issued restoring the benefit that existed in the Notification No. 118/75. This notification was given retrospective effect under the Central Excise Duties (Retrospective Exemption) Act, 1986. Thus, this notification took care of the cases hit by withdrawal of the Notification No. 118/75 after 1-3-1986. I, therefore, set aside the impugned order and allow the appeal.

·         ASEA BROWN BOVERI LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CALCUTTA-I [2001 (137) E.L.T. 384 (Tri. - Kolkata)]

Modvat - Inputs sent for conversion into intermediate products to job workers, returned beyond a period of sixty days - Erstwhile Rule 57F(2)/(3) of Central Excise Rules, 1944 having not prescribed any such condition during the relevant time, cannot be said to have been contravened. [para 5]
The analysis of above decisions makes it ample clear that the show cause notice issued to invoke the provisions that did not exist during material time is not sustainable. Though the above decisions are rendered under different facts and circumstances, yet their ratio is applicable in the instant case and based upon the same, the impugned show cause notice should be set aside.
 
10)         They further submit that the provisions existing on the period pertaining to which the refund claim is filed will be relevant for filing the refund claim. The provisions applicable on the date of filing the refund claim will not be relevant. Recently, hon’ble Madras High court has given a judgment in a similar case of M/s Winwind Power Energy Pvt. Ltd. In this case, when the order was passed, the time limit of filing the appeal under service tax law was three months. However, subsequently, this time limit was reduced to two months. Thus, when the appeal was actually filed, the new time limit of two months was applicable which has already expired. Revenue pleaded that it is the provision existing on the date of filing the appeal which are relevant. But, hon’ble High Court has held that the provisions applicable as on the date of passing of order will be relevant for the purpose of filing the appeal. This decision is worded as follows:-

·         M/s Winwind Power Energy Pvt Ltd Vs CCE[2013-TIOL-863-HC-MAD-ST]

Service tax - Appeal to Commissioner (Appeals) - Amendment of Section 85 of Finance Act, 1994 - Time for filing appeal reduced to two months - Whether provision applicable for orders passed prior to May 28, 2012?: Commissioner (Appeals) proceeded as if the date on which the appeal was preferred should be taken as the crucial date since appeal was preferred after 28.05.2012 when amendment to Section 85 of Finance Act, 1994, came into force. Commissioner (Appeals) rejected the appeal as time barred by applying the amended provision of Section 85.

The materials available on record showed that order was passed by the original authority on 27.03.2012 and that the amendment came into force on 28.05.2012. Therefore the petitioner is justified in its contention that the appeal should have been taken up on file in accordance with the regulations in force prior to 28.05.2012. The Commissioner (Appeals) is not justified in rejecting the appeal on the ground of limitation. Accordingly the order set aside and the Commissioner (Appeals) directed to register the appeal and decide the case on merits and as per law.:MADRAS HIGH COURT

In view of above decision, the provisions applicable as on the period to which the refund claim pertains, will be applicable; rather than the provisions applicable on the date of actual filing of refund. Therefore, the contention of the impugned show cause notice that the amended provisions will be applicable is not justified and is liable to be set aside.  The refund claim pertains to the month of May, 2012 and new notification came from force from 18.06.2012. Thus, following the above analogy, the old provisions will be applicable for the impugned period. Hence, they have rightly claimed the refund claim.
 

11)         It is further submitted that there is no time limit for filing the refund claim under rule 5 of the Cenvat Credit Rules, 2004. Therefore, they can file now on quarterly basis and it will be sanctioned to us. It will not be time barred. Thus, the claim is otherwise also admissible to us. Hence the demand should not be raised against us. It will only increase paper work and refund will be ultimately allowed to us. It has been held in a number of cases that there is no time limit to file the refund claim under rule 5 of the Cenvat Credit Rules, 2004. In this regard, reliance is placed on the following judgments:-

 
·         ELCOMPONICS SALES PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NOIDA [2012 (279) E.L.T. 280 (Tri. - Del.)]

Refund claim - Limitation - Time limit stipulated under Section 11B of Central Excise Act, 1944 is not applicable in case of refund claim made under Rule 5 of Cenvat Credit Rules, 2004. [para 6]
 

·         COMMISSIONER OF C. EX., AHMEDABAD Versus RANGDHARA POLYMERS [2011 (264) E.L.T. 275 (Tri. - Ahmd.)]

Refund - Limitation - Cenvat/Modvat - Deemed exports - Accumulated credit - In the absence of specific provisions related to refund of accumulated credit in Section 11B of Central Excise Act, 1944, time limit stipulated under Section 11B ibid not applicable in case of refund claim for accumulated credit under Rule 5 of Cenvat Credit Rules, 2004. [para 3]
 

·         GTN ENGINEERING (I) LTD. Versus COMMISSIONER OF C. EX., COIMBATORE [2010 (259) E.L.T. 625 (Tri. - Chennai)]

Refund of Cenvat/Modvat credit on exports - Limitation - Applicability of Section 11B of Central Excise Act, 1944 - Credit accumulated in Cenvat a/c is not duty paid by exporter - Only when credit debited towards duty payable, it will amount to payment of duty - Section 11B ibid refers to refund of duty paid - Refund claim not of duty paid but of Cenvat credit already taken - Issue decided by Tribunal in case of Swagat Synthetics Ltd. [2007 (220) E.L.T. 949 (Tribunal)] as upheld by Gujarat High Court [2008 (232) E.L.T. 413 (Guj.)] holding such accumulated credit as akin to credit in PLA - Claims not hit by time bar further as Notification No. 5/2006-C.E. (N.T.) not specify any time-limit for refund claim - Rule 5 of Cenvat Credit Rules, 2004. [para 5.2]
 

Even the authorised representative has pleaded the similar issue of time limit for refund claim under Rule 5 case of M/s Rangdhara Polymers and it has been decided in favour of the assessee vide final order number A/96-97/2010-WZB/AHDpassed by CESTAT. The decision has also been reported in the Excise Law Times as Commissioner of C.Ex., Vs. Rangdhara Polymers [2011 (264) E.L.T. 275 (Tri.-Ahd)]. It is also worth mentioning that the revenue appeal against this order has also been rejected by the High Court in Tax Appeal No. 1732 of 2010 dated 23.07.2012 and so the order passed by the Tribunal has attained finality.  
 

In view of above judgments, it is ample clear that there is no time limit for filing the refund claim under rule 5 of the Cenvat Credit Rules, 2004. Therefore, they can file the refund claims anytime and there is no bar in doing so as reflected by the above cited judgments. Hence, if the same is disallowed to them following the reason that they have not filed the refund claim on quarterly basis then also the same will be sanctioned to them once again. Hence, this technical breach will increase the paper work and ultimately the refund will be sanctioned to them. As such, the impugned show cause notice issued to them is liable to be set aside.

12)         It is further submitted that in case of erroneous refund, appeal is to be filed as well as show cause notice is to be issued. On the other hand, in the instant case which is also the case of erroneous refund; only show cause notice has been issued. The appeal has not been filed against the order in original granting the refund to us. This is not justified in the light of following decision:-

·        SREE DIGVIJAY CEMENT CO. LTD. Versus COLLECTOR OF C. EX. [1991 (52) E.L.T. 631 (Tribunal)]

Recovery of refund erroneously made due to miscalculation of quantum of refund - How to seek recovery of erroneous refund - Proceedings to be initiated simultaneously both under Section 11A and Section 35E within time limit prescribed therein - Show cause notice must precede before initiating action. -
The order passed under Section 35E(2) does not automatically result in recovery of refund. This order should be followed by a Show Cause Notice under Section 11A, which should be issued within six months from the date of actual refund. Since the time limit for filing an appeal under Section 35E(2) is longer than the time limit prescribed under Section 11A, the show cause notice should precede the proceedings under Section 35E(2), otherwise the order under Section 35E(2) becomes an empty formality and is not enforceable. Similarly, even if the show cause notice is issued for recovering the erroneous refund within the time limit prescribed under Section 11A without setting aside the order granting erroneous refund under Section 35E(2), no erroneous refund can be recovered.Therefore, the Department should initiate proceedings simultaneously under Section 11A, within the time limit prescribed therein and also under Section 35E(2) within the time limit prescribed therein. In the instant case, the refund cheque was issued on 19-5-1987 and the show cause notice ought to have been issued under Section 11A within six months from 19-5-1987. Since it was not issued though the appeal under Section 35E(2) for setting aside the order of refund is maintainable, before the Collector, the order cannot be enforced as no notice was issued under Section 11A for recovery of erroneous refund. [paras 8 & 9]

In view of above decision, the cases of the erroneous refund should be followed by both show cause notice as well as the appeal. Even the department has the practice to follow the same but it has not been done in the instant case. This is not justified in view of above cited decision. Therefore, the impugned show cause notice cannot stand in absence of appeal filed against the order in original granting the refund. 

Reasoning of Judgment:After carefully going through the records of the case including show cause notice and written submissions made, it is found that the said refund claim was sanctioned to the assessee under Rule-5 of Cenvat Credit Rules, 2004 vide Order-in-Original passed by the Deputy Commissioner, Central Excise & Service Tax Division, Jodhpur. Then, there after at the time of post-audit, it was noticed that these claims were not filed under proper notification and without following the proper procedure. The claim was filed under Notification No. 5/2006-CE(NT) dated 14.03.2006 which was in existence / effective only up to 17.06.2012 and from 18.06.2012 onwards the same was superseded vide notification no. 27/2012 CE(NT) dated 18.06.2012.

Therefore, the assessee was issued show cause notice for erroneous refund with the following allegations:

1)    the assessee had not filed the claim under proper notificationand also not followed the procedure mentioned therein.

2)    that the assessee had submitted the refund claim on monthly basis while he was required to file the same on quarterly basis.

3)    that the assessee was required to debit the amount claimed as refund under the rule 5 of the said rules from the Cenvat Account at the time of claiming the refund.

The Adjudicating authority found that in regard to not filing the claim under proper notification and filing the claim on monthly basis rather than quarterly basis, the assessee has submitted that they were not aware of the fact that the notification no. 5/2006 has been rescinded and therefore they continued to follow the same.

The assessee has further submitted that there was no gain by not following the conditions and contended that filing of the claim on quarterly basis would have been more cost effective they would have saved to face the departmental proceedings.

They also found that filing of refund claim under Rule 5 of either on monthly basis or on quarterly basis do not make any difference in benefits available to the assessee. As refund claim under Rule 5 is given on the basis of accumulated cenvat credit during the relevant period. Therefore the proportion of refund to be sanctioned would have been same, computing either on monthly basis or on quarterly basis. Therefore, they hold that filing claim on monthly basis rather that quarterly basis can be considered as a procedural irregularity committed by the assessee as he was not going to gain anything extra benefit by doing so and there was no loss of Revenue to the Government.

The Adjudicating Authority further found that even though the assessee was filing the refund claim on monthly basis but not filing on quarterly basis yet there was no loss of the revenue as the assessee had filed the refund claim after expiry of substantial period of time. They also find that the claim for the month of May, 12 on 30.04.2013.Therefore, the adjudicating authority hold that since filing of claim on monthly basis rather than quarterly basis have made no effect on revenue so it is considered as procedural lapse.
In respect of the fact that the assessee was required to debit the amount claimed as refund under the rule 5 of the said rules from the Cenvat Account at the time of claiming the refund and assessee failed to do so, the assessee has submitted that the amount of Cenvat Credit which was allowed as refund cannot be utilized otherwise also and they were debiting the amount of credit claimed as refund earlier also and afterwards also. The only difference being the time of debit. The adjudicating authority also found that the difference in the time of making the debit entry (particularly when the same remained unutilized) is merely a procedural lapse which is condonable.

The adjudicating authority also found that there was no ambiguity in the export of the goods therefore refund cannot be denied to the assessee merely on the procedural/technical lapses. In the case of UOI v. Suksha International and Nutron Gems & others - 1989 (39)  E.L.T. 503 (S.C.), Hon'ble Supreme Court has observed that an interpretation unduly restricting the scope of beneficial provision is to be avoided so that it may not take away with one hand what the policy gives with the other. Further, in the case of Mangalore Chemicals and Fertilizers Ltd. v. DCCE - 1991 (55)  E.L.T. 437 (S.C.), Hon'ble Supreme Court while drawing a distinction between a procedural condition of technical nature and a substantive condition in interpreting statute observed that procedural lapses of technical nature can be condoned so that substantive benefit is not denied for mere procedural infractions. In fact, it is now trite law that the procedural infractions of notifications/circulars should be condoned if exports have really taken place and the law is settled that substantive benefit cannot be denied for procedural lapses. It was also found that no appeal have been filed against the subjected OIO's by the department, therefore, it was concluded that only procedural lapses have occurred during the sanction of refund which due to which refund cannot be denied.
Therefore in view of the foregoing paras, it was held that the proceedings initiated vide subject Show Cause Notices was on the basis of procedural lapses of technical nature only and which are condonable.
 

Decision:SCN dropped.

Conclusion:The gist of the case is thatfiling of refund claim under Rule 5 either on monthly basis or on quarterly basis do not make any difference in the benefits available to the assessee. Moreover, filing of refund claim by assessee monthly rather than quarterly would add to paper work and other indirect costs. Further, there is no change in the amount of refund claim admissible to the assessee and it can be concluded without any doubt that filing claim on monthly basis rather that quarterly basis is to be considered as a procedural irregularity committed by the assessee as he was not going to gain anything extra benefit by doing so. There was also no loss of Revenue to the Government. As such, the non-fulfillment of the condition was technical in nature and was condonable. Moreover, the non satisfaction of the condition of debit entry in the Cenvat account before filing of the refund claim also had less relevance because there was no dispute as regards non-utilisation of the said amount and debit had been made later on by the assessee. Therefore, the show cause notice issued for recovering rightly sanctioned refund claim on procedural infractions of law was held to be not sustainable because the substantial conditions for claiming the refund claim was fulfilled by the assessee.