Customs, Excise and Gold Tribunal - Mumbai
Navbharat Industries vs Commissioner Of Central Excise on 24 March, 2006
Equivalent citations: 2006(107)ECC476, 2006ECR476(TRI.-MUMBAI), 2006(199)ELT148(TRI-MUMBAI)
ORDER Archana Wadhwa, Member (J)
1. The dispute in the present appeal relates to refund claims filed by the appellant in terms of the provisions of Rule 5 of the Cenvat Credit Rules, 2002 and rejected by the authorities below.
2. After hearing both sides, we find that as per the facts on record, the appellant is engaged in the processing of textile fabrics, mainly cotton fabrics and exporting the same under bond. As a result of export of the final products, Modvat credit availed in respect of the inputs got accumulated in their records and could not be utilized for home clearance for payment of duty. Accumulation of credit was also on the ground that whereas the rate of duty on input was 10%, final product attracted duty only @5%. Accordingly, the refund claims on monthly basis was filed by the appellant in terms of the provisions of Rule 5 of the Cenvat Credit Rules, 2002 read with Notification No 11/02-CE (NT). The said refund claims were rejected by the original adjudicating authority i.e. the Deputy Commissioner on the ground that computation of the amount of credit was on average basis; that the assessee have not utilized the credit for subsequent clearances; that Rule 5 is not applicable in respect of the credit availed on one time basis in terms of the provisions of Rule 9A. The said order was appealed against before the Commissioner (Appeals) who confirmed the same. Hence the present appeal.
3. We find that in terms of the provisions of Rule 5 of Cenvat Credit Rules, 2002 where any inputs are used in the final products which are cleared for export under bond... the Cenvat Credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards demand of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification.
4. The Central Government vide its Notification No. 11/02-CE (NT) dated 1.3.2003 in exercise of the powers conferred by said Rule 5 of Cenvat Credit Rules, 2002 has laid down safeguards, conditions and limitations, set out in the Appendix to the said Notification. As per serial No 2 of the said Appendix, claims for refund in respect of export clearance of textile and textile articles can be made in each calendar month. This shows that if an assessee is not able to utilize the credit within one month, he could claim refund of the credit of duty paid on the inputs used in the manufacture of final product which stands ultimately exported under bond. As such the objection of the authority below that the appellant could have utilized the said credit for future clearances is clearly erroneous.
5. It is also seen that the appellant had availed transitional credit in terms of the provisions of Rule 9A of the Cenvat Credit Rules. 2002 and notification No. 35/03-CE(NT) dated 10.4.2003 to the tune of Rs. 13,19,080/-. The said rule read with Notification in question entitled the assessee to avail the credit as specified therein in respect of inputs lying in stock or semi processed or on inputs contained in the finished goods lying in stock. The authorities below have rejected the refund on the ground that refund cannot be granted in respect of the said credit in terms of Rule 5. However, we find that Rule 3(2) allow an assessee to take Cenvat Credit of the duty paid on inputs lying in stock or in process or contained in the final product lying in stock on the date on which any goods seized to be exempted goods or any goods become excisable. As such Rule 3(2) is the enabling provision entitling an assessee to avail the credit and notification issued under Rule 9A was only for quantifying the credit amount. Serial No. 5 of Notification No. 11/02-CE(NT) issued under Rule 5 relates refund of that credit of duty on inputs allowed under Rule 3 of the said rules against goods exported during that quarter or month to which the claim relates. Admittedly the transitional credit was availed under Rule 3 and as such, as rightly argued by the appellant, was covered by the provisions of Rule 5. We find no justification for denying the same to the appellant.
6. We agree with the Ld Advocate appearing for the appellant that the provisions of Rule 5 relating to refund of Modvat credit accumulated in the records on account of their non utilization for the exported goods is a beneficiary piece of legislation, the refund arising on account of the same cannot be denied being a substantive right of the citizen. The wording of Rule 5 read with Rule 3 are very clear providing for refund of accumulated Modvat credit if the same cannot be adjusted for any reason. As such the only condition in the said Rule is non utilization of the credit and no jurisdiction vests in the Central Excise officer to find out the reason for such non adjustment. The use of the expression that "where for any reason" such adjustment is not possible, the manufacturer shall be allowed refund of such amount' is an unlimited expression and cannot be narrowed or curtailed down by the departmental authorities.
7. In view of our foregoing discussion, we set aside the impugned order and hold that the appellant is entitled to the refund of the accumulated credit which shall be quantified by the authority below, after looking into their records for which purposes we remand the matter to the original adjudicating authority.
8. The appeal is disposed of in above terms.
(Pronounced in Court.)