Custom, Excise & Service Tax Tribunal
M/S.Uniworth Textiles Ltd vs Cce, Raipur on 9 August, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:02.08.2016 Date of Decision:09.08.2016
Appeal No.2247/2008-EX(DB)
[Arising out of Order-in-Appeal No.84/RPR-I/2008 dated 31.07.2008 passed by the Commissioner (Appeals-I),Central Excise & Customs, Raipur]
For Approval and Signature:
Honble Mr. Justice (Dr.) Satish Chandra, President
Honble Shri V. Padmanabhan, Member (Technical)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
M/s.Uniworth Textiles Ltd. Appellants
Vs.
CCE, Raipur Respondent
Appearance:
Rep. by Shri Rupesh Kumar, Advocate for the appellant.
Rep. by Shri Yogesh Agarwal, DR for the respondent.
Coram: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Shri V. Padmanabhan, Member (Technical) Final Order No.52931/2016 /Dated:9.8.2016 Per V. Padmanabhan:
The present appeal has been filed against the order dated 31.07.2008 passed by the Commissioner (Appeals),Raipur. The appellant is a manufacturer of textile products and availing the cenvat credit of duty for payment of central excise duty on the finished products. The dispute is regarding the claim of refund filed under Rule 5 of the Cenvat Credit Rules. This refund claim was filed on the ground that they are not in a position to utilize the cenvat credit of duty paid on the inputs used in the manufacture of final products, which were cleared to a 100% EOU under CT-3 certificates. The claim was disallowed by the Original Authority vide his order dated 28.02.2008 on the ground that the clearances to 100% EOU is in the nature of deemed exports. The refund of cenvat credit under Rule 5 can be given only where there is actual export. The rejection of the refund claim was upheld by first Appellate Authority vide his impugned order and hence, the present appeal before this Tribunal.
2. The appellant has challenged the impugned order with the argument that since the goods cleared by them to a 100% EOU is used in the manufacture of goods, which are exported, the same will have to be considered as exports and the assessee would be entitled to claim of refund of cenvat credit taken, if it cannot be used for payment of duty. They cited the following case laws, which are in their favour:-
(1) CCE Vs. Shilpa Copper Wire Industries 2011(269) ELT 17 (Guj.) (2) CCE Vs. Shilpa Copper Wire Industries-2008(226) ELT 228(T-Ahmd.) (3) Manoj Handlooms Vs. CCE, Chennai-2009(240) ELT 158(T-Elcomponics Sales Pvt. Ltd.Vs.CCE,Noida-2012(279)ELT 280(T-Delhi)
3. Heard Shri Rupesh Kumar, ld. Counsel for the appellant as well as Shri Yogesh Agarwal, DR for the respondent/Revenue.
4. Ld. Counsel for the appellant submitted that the supply of goods to 100% EOU is to be considered as export for the purposes of Rule 5 of the Cenvat Credit Rules. He further submitted that the benefit of refund under Rule 5 has been extended by the Honble Gujarat High Court in the case of CCE Vs. Shilpa Copper Wire Industries 2011 (269) ELT 17 (Gujarat).The Honble Tribunal has also extended similar benefit in the following cases:-
(1) CCE Vs. Shilpa Copper Wire Industries 2008 (226) ELT 228(T-Ahmd.) (2) Manoj Handlooms Vs. CCE, Chennai- 2009 (240) ELT 158(T-Chennai) (3) Elcomponics Sales Pvt. Ltd.Vs.CCE,Noida-2012 (279) ELT 280(T-Delhi)
5. He further submitted that since the issue is no longer res integra, their appeal deserves to be allowed.
6. Ld. DR, on the other hand, submitted that the goods cleared by a DTA unit to 100% EOU against CT-3 were removed from the factory under cover of ARE-3. Thus, the goods were not taken out of India. The agency to give relief of terminal excise duty for deemed export is DGFT and not CBEC. He further contended that the word used in Rule 5 was export, which is defined in the Customs Act, 1962 under Section 2(18) as, taking out of India to a place outside India. Accordingly, he prayed that the appeal deserves to be dismissed.
7. We have heard both the sides and given due consideration to the submissions as well as the relevant records.
8. Rule-5 of the Cenvat Credit Rules is 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 utilized 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 Service Rules, 2005.] This rule provides for refund of cenvat credit taken on inputs or input service when the same is used in the manufacture of final product, which is cleared for export. The rule also provides for refund, when such final product is used in the intermediate product or used for providing output service, which is exported. The dispute in the present case is whether the clearances to 100% EOU (which is a deemed export) may be considered on par with export, which is export out of India. The lower authorities have refused the refund, taking the view that the refund can be granted only where there is actual export. However, the appellant has argued that the clearances to 100% EOUs is at par with physical export. We find that an identical issue has been considered by several benches of this Tribunal as also the Honble High Court of Gujarat. In the decision of the Honble Gujarat High Court in the case of CCE Vs. Shilpa Copper Wire Industries (supra), the Honble Gujarat High Court has held that the clearances to 100% EOU be considered on par with physical export for which refund of un-utilised cenvat credit is allowable. An identical view has been taken by the Tribunal in Elcomponics Sales Pvt. Ltd. 2012 (279) ELT 280 (Tribunal-Delhi), in which it has been held as follows:-
5.?I have carefully considered the submissions from both the sides and perused the records. First and the main point of dispute in this case is as to whether the provisions of Rule 5 of the Cenvat Credit Rules, 2004 are applicable in respect of supplies by a manufacturer without payment of duty to 100% EOU. On this point, I find that there are a series of judgments of Honble Gujarat High Court and of the Tribunal, which are in favour of the appellant - (a) Honble Gujarat High Courts judgment in the case of C.C.E. v. Shilpa Copper Wire Industries reported in 2011 (269) E.L.T. 17 (Gujarat) and also 2010 (258) E.L.T. A20 and the Tribunals judgments in the cases of Western Cans P. Ltd. reported in 2011 (270) E.L.T. 101 (Tribunal-Mumbai) and NBM Industries v. C.C.E. reported in 2009 (246) E.L.T. 252 (Tribunal-Ahmd.). In all these judgments, it has been held that when the finished goods manufactured out of cenvat credit availed inputs have been supplied to 100% EOUs, refund of accumulated cenvat credit under Rule 5 cannot be denied on the ground that the supplies to 100% EOU are deemed export and not real exports, as Rule 5 of the Cenvat Credit Rules also provides for the refund of cenvat credit on the goods which are cleared as intermediate products for manufacture of final products for export and supplies to 100% EOU have to be treated as clearances for export. Honble Gujarat High Court in another judgment in case of C.C.E. v. NBM Industries reported in 2011 TIOL 677-HC-AHM (CX) = 2012 (276) E.L.T. 9 (Guj.) has reiterated its earlier view that refund under Rule 5 of Cenvat Credit Rules, 2004 cannot be denied on the ground that deemed exports are not physical exports. In view of settled legal position on this issue, I hold that the provisions of Rule 5 of the Cenvat Credit Rules would be applicable even in respect of supplies made without payment of duty to 100% EOUs and the cash refund of the accumulated cenvat credit in respect of such supplies cannot be denied This Tribunal has also taken a similar view in many other cases cited above.
9. In view of the above judicial pronouncements, we are of the view that the issue is no more res integra and stands decided in favour of the appellant. Accordingly, we have no hesitation in setting aside the impugned order and allowing the appeal.
[Order pronounced in court on 9.8.2016.] ( Justice Dr. Satish Chandra) President ( V. Padmanabhan ) Member (Technical) Ckp.
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