Gujarat High Court
Triveni Rayons P. Ltd vs Commissioner Of Central Excise And ... on 7 September, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, Biren Vaishnav
O/TAXAP/635/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 635 of 2017
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TRIVENI RAYONS P. LTD.....Appellant(s)
Versus
COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS....Opponent(s)
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Appearance:
MR ANAL S SHAH, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Date : 07/09/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This appeal is filed by the assessee challenging the judgment of the CESTAT dated 28.01.2016. Following questions are presented for our consideration:
"(i) Whether in the facts and circumstances of the case, CESTAT was justified in upholding the order of Commissioner (Appeals) and in turn Adjudicating Authority, rejecting the application of the Appellant filed under Rule 5 of Cenvat Credit Rules, 2004 for refund of Cenvat Credit accumulated due to difference in rate of excise duty on input and final product when the Appellant had opted out of Cenvat regime?
(ii) Whether CESTAT has misinterpreted the provision of Rule 5 of Cenvat Credit Rules, 2004 by observing that refund of cenvat credit can only be allowed in case the final product is cleared for export under bond?Page 1 of 5
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(iii) Whether in the facts and circumstances of the case, CESTAT has erred in law in ignoring the fact that Rule 5 of Cenvat Rules allows for refund if for any reason input credit cannot be adjusted by manufacturer against payment of excise duty on final product?
(iv) Whether the claim of the Appellant for refund of accumulated Cenvat Credit is tenable in law in view of the fact that Appellant had opted out of Cenvat regime and therefore, the accumulated Cenvat Credit on inputs could not be adjusted against payment of excise duty on final product?"
2. The assessee is a manufacturer and is engaged in manufacturing of polyester texturised yarn. The assessee had surrendered the central excise registration, at which time, it had balance unutilized CENVAT credit of Rs.62.05 lakhs and a further sum of Rs.52.03 lakhs in the capital goods account. The assessee filed a refund application on 03.04.2017 for a sum of Rs.1.04 crores basing the claim under rule 5 of Cenvat Credit Rules, 2004. The adjudicating authority as well as the Tribunal rejected the claim. Hence, this appeal.
3. The Tribunal while confirming the decisions of the authorities observed that in case of the assessee, the refund of the unused CENVAT credit do not arise Page 2 of 5 HC-NIC Page 2 of 5 Created On Sun Sep 10 06:52:25 IST 2017 O/TAXAP/635/2017 ORDER out of the export of the goods. In other words, the Tribunal confirmed the view of the authority that refund would be available in case of CENVAT input or input for manufacture of export. Rule 5 of the said Rules reads as under:
"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 subsection (5) of section 3 of the Customs Tariff Act shall be utilised for Page 3 of 5 HC-NIC Page 3 of 5 Created On Sun Sep 10 06:52:25 IST 2017 O/TAXAP/635/2017 ORDER 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."
3. In plain terms therefore the refund under rule 5 would be available when any input or input service is used in manufacture of any final product or letter of undertaking or use in the intermediate product cleared for export, or used in providing output service which is exported. If this conditions are satisfied, refund of CENVAT would be available subject to other conditions mentioned in the rules. Admittedly, the CENVAT does not relate to any input or input service used in any final product or used in intermediate product cleared for export or used in providing output service which is exported.
4. We see no error in the view of the Tribunal. No question of law arises. Tax Appeal is dismissed.
(AKIL KURESHI, J.)
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O/TAXAP/635/2017 ORDER
(BIREN VAISHNAV, J.)
ANKIT
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