Custom, Excise & Service Tax Tribunal
Nitin Spinners Ltd vs C.C.E.- Jaipur on 24 October, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
R.K. PURAM, WEST BLOCK NO. 2, NEW DELHI-110066
COURT NO. III
Date of hearing: 07/09/2016
Date of Pronouncement 24/10/2016
Appeal No. E/1888/2010-EX [SM]
[Arising out of Order-in-Appeal No. 197 (KKG) CE/JPR-II/2010 dated 31/03/2010 passed by the Commissioner (Appeals) Central Excise, Jaipur]
For Approval and Signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would 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 of the order?
Seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
Nitin Spinners Ltd Appellant
Vs.
C.C.E.- Jaipur Respondent
Appearance: Ms. Rinki Arora, Advocate for the appellant.
Shri Dharam Singh, AR for the respondent.
Coram: Honble Mrs. Archana Wadhwa Member (Judicial) FINAL ORDER NO. 54612/2016 Per: Archana Wadhwa The appellant are a 100% EUO engaged in manufacture of cotton yarn and knitted fabrics of cotton chargeable to Central Excise duty. They have availed Cenvat credit of Central Excise Duty paid on some inputs and of Service Tax paid on input services, which they use for payment of duty in respect of their DTA clearances. Rule 5 of the Cenvat Credit Rules, 2004 readwith Notification No. 5/2006-CE (NT) dated 14/3/06 issued under this Rule provides that where any inputs or input services are used in manufacture of final product, which is cleared for export under bond or under letter of undertaking or is used in the intermediate product cleared for export or used in providing output service which is exported, the Cenvat credit in respect of such inputs or input services so used shall be allowed to be utilized by the manufacturer or output service provider towards payment of excise duty on any final product cleared for home consumption or export on payment of duty or for payment of service tax on output service and where for any reason such use of Cenvat credit is not possible, the manufacturer or output service provider shall be allowed refund of such amount subject to such safeguards, conditions and limitations as prescribed in the notification. This cash refund of such accumulated Cenvat credit is subject to the condition that the manufacturer or output service provider has not claimed drawback under the Customs and Central Excise Duty Drawback Rules, 1995 in respect of the export of finished product or has claimed rebate of duty under Central Excise Rules or has claimed rebate of service tax under export of Service Rules, 2005. In this case the appellant filed refund claim of Rs.16,37,117/- under Rule 5 of the Cenvat Credit Rules, 2004 for case refund of the accumulated credit and the Jurisdictional Assistant Commissioner vide order dated 14/8/08 sanctioned the refund claim of an amount of Rs.15,35,068/- and rejected the claim for balance amount of Rs.1,02,049/-. However, the Assistant Commissioners order dated 14/8/08 was reviewed by the Commissioner and the review appeal was filed before Commissioner (Appeals) on the grounds that
(a) Out of the accumulated Cenvat credit whose refund is sought, an amount of Rs.92,576/- is Cenvat credit in respect of GTA service related to outward transportation of the export goods to which the appellant are not entitled and, hence, there was no question of its refund under Rule 5 and
(b) Refund amount of Rs.11,08,095/- is in respect of Cenvat credit of service tax paid on erection, installation, commissioning service for erection, installation, commissioning of the power plant which had started functioning on 31/3/2008, while the goods in respect of which the refund claim under Rule 5 has been filed, had been exported during the period prior to 31/3/2008 and, thus, the input services, in question, in respect of which the Cenvat credit had been taken had been taken, had not been used for manufacture of the goods exported.
1.1 The Commissioner (Appeals) vide order-in-appeal dated 24/3/10 while rejecting the Departments appeal with regard to refund of Cenvat credit of service tax paid on GTA service for outward freight and upholding the Assistant Commissioners order in this regard, allowed the departments appeal in respect of the refund of credit of service tax paid on erection, installation, commissioning service used for erection, installation, commissioning of captive power plant on the ground that while the power plant had started functioning on 31/3/2008, the goods in respect of which this refund claim had been filed, had been exported prior to 31/3/2008. The Commissioner (Appeals), thus, set aside the Assistant Commissioners order in respect of refund amount of Rs.11,08,095/. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides 2.1 Ms. Rinki Arora, Advocate, the learned Counsel for the appellant, pleaded that while the capital goods in respect of which erection, installation and commissioning service had been used, had started functioning from 31/3/2008, the refund claim is in respect of the goods exported prior to this date, no one to one relation is required to be established between the availment of Cenvat credit in respect of same inputs and input services and their use in the manufacture of final products, that the appellant were eligible for Cenvat credit in respect of input services as soon as the same had been received by them and payment for the same had been made by them and since the Cenvat credit in respect of erection, installation and commissioning service availed for erection, installation and commissioning service of the captive power plant was available as on 31/3/2008 and the appellant were in a position to utilize the same for payment of duty on GTA clearances or for export of the goods under rebate claim payment of duty, they were entitled for cash refund of the accumulated credit under Rule 5 of the Cenvat Credit Rules, as they could not utilized the credit, that in this regard she relied upon the judgment of the Tribunal in the case of CCE, Hyderabad Vs. Ravi Foods Ltd. Reported in 2011 (271) E.L.T. 436 (Tri. Bang.), wherein it was held that for cash refund of accumulated credit under Rule 5 of the Cenvat Credit Rules, correlation of the inputs with the final products exported is not required to be established and the question of restricting the refund claim to the extent, the input services were consumed during the quarter is misplace, that in view of this, the impugned order is not correct. The same may be set aside and appeal allowed.
2.2 Shri Dharam Singh, the learned Departmental Representative, opposed the stay application by reiterating the findings of the Commissioner (Appeals) in the impugned order and pleaded that when the input services, in question, were not used in the manufacture of the goods which had exported, there is no question of grant of cash refund of the credit in respect of the same under Rule 5 of the Cenvat Credit Rules. He, therefore, pleads for rejecting the appeal.
3. I have carefully considered the submissions from both the sides and perused the records.
4. I find that the point of dispute in this case stand decided in the favour of the appellant by the Tribunals judgment in the case of CCE, Hyderabad Vs. Ravi Foods Ltd. (supra). Moreover, I also find that the point regarding one to one co-relationship is not the point stemming from the order-in-original, which was passed by the Assistant Commissioner. It is only at the review stage that the point of one to one co-relationship between the receipt of input service in installation of capital goods and use of those capital goods in manufacture of the final products exported was raised. As the issue stands decided in favour of the assessee by the above referred decision of the Tribunal, I set aside the impugned order and allow the appeal with consequential relief.
(Order pronounced in the open Court on 24/10/2016) (ARCHANA WADHWA) MEMBER (JUDICIAL) K. Gupta 6 Appeal No. E/1888/2010-EX [SM]