Custom, Excise & Service Tax Tribunal
Kopran Ltd vs Commissioner Of Central Excise, Raigad on 9 July, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL Nos. E/89530, 89837, 89836, 88810/13-Mum (Arising out of Orders-in-Appeal No. US/153&154/RGD/2013 dated 31.5.2013, No. SK/253&254/RGD/2013-14 dated 26.9.2013 passed by Commissioner of Central Excise (Appeals), Mumbai-II) For approval and signature: Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. S.S. Garg, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Kopran Ltd. Appellant Vs. Commissioner of Central Excise, Raigad Respondent Appearance:
Shri Vishal Agarwal, Advocate, with Shri Nawandhar, Advocate, for appellant Shri V.K. Agrawal, Additional Commissioner (AR), for respondent CORAM:
Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial) Date of Hearing: 9.7.2015 Date of Decision: 9.7.2015 ORDER NO Per: P.K. Jain Heard both sides.
2. We find that in all the four cases, the issue involved is common and is also covered in appellants own case for the earlier period, vide order No. A/767-770/13/EB/C-II dated 5.7.2013.
3. The learned AR submits that in the present cases in some appeals, the appellant had not produced all the documents for verification and in one case did not appear for personal hearing or replied to the show cause notice.
4. The learned counsel for the appellant, on the other hand, submits that though in the show cause notice it has been alleged that documents have not been produced for verification but the fact is that all documents were produced to the Superintendent who verified the documents and submitted the report to the Assistant Commissioner. Even during personal hearing they have made this submission and also stated that if any document is required, the same may be specified so that they can produce. After hearing the party, the Assistant Commissioner did not pursue this point as the documents had already been seen by the Superintendent and in the final order, Asst. Commissioner has confined himself to the legal issues which are already covered by this Tribunals order dated 5.7.2013.
5. We note that in the said order, this Tribunal has observed as under:-
4. The brief facts of the case are that the appellants are engaged in the manufacture of pharmaceutical products and medicines. The applicants are exporting the goods manufactured. In some cases the appellants were clearing their final products under bond without payment of duty. In such cases the appellants filed refund claims under the provisions of Rule 5 of the Cenvat Credit Rules, 2004. The refund claims which are in dispute in the present appeals are in respect of such claims.
5. The Revenue issued show cause notices for rejection of the refund claims on various grounds. The appellants responded to the allegations made in the show cause notices and filed relevant documents. The adjudicating authority rejected the refund claims on the ground that the appellants failed to show that they were unable to utilize the accumulated cenvat credit for payment of duty on home clearances as well as for exports and also that the appellants failed to segregate the accumulated credit on account of the goods exported on payment of central excise duty and those exports without payment of duty as no such accounts are maintained by the appellants.
6. The contention of the appellants is that the appellants are manufacturing the pharmaceutical products and maintaining the records batch-wise and this evidence was produced before the adjudicating authority. As one-to-one correlation in respect of the duty paid inputs and the use in the manufacture of the goods which were exported without payment of duty. The batch numbers were specifically mentioned in the records which show the use of the duty paid inputs in the manufacture of the goods which were exported under bond. In spite of this evidence, the lower authorities rejected the refund claims by saying that the appellants failed to show one-to-one correlation.
7. The contention is that the appellants were also exporting the goods which were cleared on payment of appropriate duty and the appellants were claiming rebate of duty paid on such goods.
8. The appellants submitted that as per the provisions of Rule 5 of the Cenvat Credit Rules as well as Notification No.5/2006-CE(NT) dated 14.3.2006, the only obligation of the manufacturer is to show that the duty paid inputs are used in the manufacture of goods which were exported under bond and the manufacturer is unable to utilize the accumulated cenvat credit during that quarter/month. In the present case the appellants have filed refund claims on monthly basis. The appellants were filing refund claims as per the procedure prescribed in the above mentioned Notification and the appellants had produced evidence in respect of use of duty paid inputs in the manufacture of goods which were cleared under bond hence the impugned orders are not sustainable.
9. The Revenue relied upon the provisions of Rule 5 of the Cenvat Credit Rules as well as Notification 5/2006-CE. The contention of the Revenue is that the appellants should have cleared the final products on payment of duty as the appellants were having sufficient balance in the cenvat account. It is submitted that there is no situation or grounds forthcoming, which prevented the appellants from utilizing the accumulated cenvat credit for their exports on payment of duty as they have done in many cases instead of partial export without payment of duty hence the refund claims are rightly rejected.
10. We find that the appellants filed refund claims as per the provisions of Rule 5 of the Cenvat Credit Rules. For ready reference, the provisions of Rule 5 are reproduced below:-
Rule 5. Refund of Cenvat credit. - 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 CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,
(i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or
(ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:
Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax.
Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilised for payment of service tax on any output service.
Explanation: For the purposes of this rule, the words 'output service which is exported' means the output service exported in accordance with the Export of Services Rules, 2005. Notification 5/2006-CE(NT) dated 14.3.2006 is issued in exercise of powers conferred under Rule, which provides procedure and conditions for refund claim. For ready reference, the provisions of the Notification are reproduced below:-
Notification No. 05/2006 - Central Excise (N.T.) G.S.R. (E) In exercise of the powers conferred by rule 5 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.11/2002 - Central Excise (NT), dated 1st March, 2002, published in the Gazette of India Extraordinary, vide number G.S.R. 150(E), dated 1st March, 2002, the Central Government hereby directs that refund of CENVAT credit shall be allowed in respect of :
(a) input or input service used in the manufacture of final product which is cleared for export under bond or letter of undertaking;
(b) input or input service used in providing output service which has been exported without payment of service tax, subject to safeguards, conditions and limitations, set out in the Appendix to this notification.
Appendix
1. The final product or the output service is exported in accordance with the procedure laid down in the Central Excise Rules, 2002, or the Export of Services Rules, 2005, as the case may be.
2. The claims for such refund are submitted not more than once for any quarter in a calendar year Provided that where,-
(a) the average export clearances of final products or the output services in value terms is fifty percent or more of the total clearances of final products or output services, as the case may be, in the preceding quarter; or
(b) the claim is filed by Export Oriented Unit, the claim for such refund may be submitted for each calendar month.
3. The manufacturer or provider of output service, as the case may be, submits an application in Form A annexed to this notification to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, in whose jurisdiction,-
(a) the factory from which the final products are exported is situated, along with the Shipping Bill or Bill of Export, duly certified by the officer of customs to the effect that goods have in fact been exported; or
(b) the registered premises of the service provider from which output services are exported is situated, along with a copy of the invoice and a certificate from the bank certifying realization of export proceeds
4. The refund is allowed only in those circumstances where a manufacturer or provider of output service is not in a position to utilize the input credit or input service credit allowed under rule 3 of the said rules against goods exported during the quarter or month to which the claim relates (hereinafter referred to as the given period).
5. The refund of unutilised input service credit will be restricted to the extent of the ratio of export turnover to the total turnover for the given period to which the claim relates i.e. Maximum refund # Total CENVAT credit taken on input services during the given period W export turnover w Total turnover Illustration: If total credit taken on input services for a quarter = Rs. 100 Export turnover during the quarter = Rs 250 Total Turnover during the quarter = Rs 500 Refund of input service credit under Rule 5 of the CENVAT Credit Rule, during the quarter # 100*250/500 i.e. Rs 50 Explanation: For the purposes of condition no.5,-
1. Export turnover shall mean the sum total of the value of final products and output services exported during the given period in respect of which the exporter claims the facility of refund under this rule.
2. Total turnover means the sum total of the value of,-
(a) all output services and exempted services provided, including value of services exported;
(b) all excisable and non excisable goods cleared, including the value of goods exported;
(c) The value of bought out goods sold, during the given period.
6. The application in Form A, along with the prescribed enclosures and the relevant extracts of the records maintained under the Central Excise Rules, 2002, CENVAT Credit Rules, 2004, or the Service Tax Rules, 1994,in original, are filed 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(1 of 1944).
7. The refund of excise duty or service tax is allowed by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be.
11. In the present case the appellants were filing refund claims as per the provisions of Rule 5 of the Cenvat Credit Rules. The only objection of the Revenue is that in some cases the appellants were clearing the final products on payment of duty, which were exported, and claiming rebate in respect of such duty paid hence it is not a case where the appellants were unable to utilize the accumulated cenvat credit.
12. We find that the provisions of Rule 18 of the Central Excise Rules, 2002 provide that a manufacturer can claim rebate in respect of duty paid on exported goods. Rule 5 of the Cenvat Credit Rules provides that a manufacturer can claim the refund of accumulated cenvat credit which is in respect of the goods exported under bond and unable to utilize the same. The main objection of the Revenue in the present case is that as per the provisions of Notification No.5/2006, refund is allowed only in those circumstances where a manufacturer is not in a position to utilize the input credit allowed under the Cenvat Credit Rules against goods exported during the quarter or month to which the claim relates. In the present case the appellants produced evidence to show one-to-one correlation batchwise. The appellants produced evidence batch-wise as the appellants were manufacturing pharmaceutical products, in respect of the duty paid inputs received and their use in the manufacture of goods cleared under bond and the appellants were unable to utilize such accumulated credit during the month regarding which the appellants claimed refund under Rule 5 of the Rules. In these circumstances, we find merit in the contentions of the appellants. The impugned orders are set aside and the appeals are allowed.
6. We have gone through the four orders-in-original as also the order passed by the Commissioner (Appeals). We find that the points raised are squarely covered by our earlier decision. In view of this fact, all the four appeals are allowed.
(Pronounced in Court) (S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical) tvu 1 8