Custom, Excise & Service Tax Tribunal
M/S. Reliance Chemotex Industries Ltd vs C.C.E. Jaipur-Ii on 11 June, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. II Appeal No. E/1839/2009-EX(SM) [Arising out of Order-in-Appeal No. 216(DK)CE/JPR-II/2009 dated 20.03.2009 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur]. For approval and signature: Honble Shri Ashok Jindal, Member (Judicial) 1 Whether Press Reporters may be allowed to see 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 of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s. Reliance Chemotex Industries Ltd. .Appellants Vs. C.C.E. Jaipur-II .Respondent
Appearance:
Ms. Surbhi Sinha, Advocate for the Appellant Shri R.K. Mishra, DR for the Respondent CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Date of Hearing: 11.06.2015 FINAL ORDER NO. 51916/2015-EX(SM) Per Ashok Jindal:
This appeal is against the impugned order, consequent to that an amount of Rs. 39,87,276/- which has become payable by the Appellant in pursuance of order-in-appeal No. 26 (DK) CE/JPR-II/2009 dated 20/3/2009 passed by CCE (Appeals), Jaipur.
1.1 The appellant manufacture and export yarn falling under chapter 55 of the Central Excise Tariff and also avail Cenvat credit of the duty on the inputs used in the manufacture of the yarn. During July 2007 September 2007 period, the Appellant exported yarn under bond without payment of duty as per the provision of Rule 19 of the Central Excise Rules 2002. Since the appellant had taken input duty credit in respect of the duty paid inputs used in the manufacture of the yarn which had been exported and since the accumulated credit could not be utilized for payment of duty on clearance for home consumption, the Appellant, as per the provisions of Rule 5 of the Cenvat credit Rules, 2002, applied for cash refund of unutilised Cenvat credit of Rs. 39,87,276/- which was sanctioned by the Assistant Commissioner vide order-in-original No. 134/08/R-CE (Ref) dated 23/6/08. The Department filed a review appeal to CCE (Appeals) against the Assistant Commissioners order which was allowed by the CCE (Appeals) vide order-in-appeal No. 216 (DK) CE/JPR-II/2009 dated 20/3/09 and the Assistant Commissioners order dated 23/6/08 sanctioning cash refund of the Cenvat credit accumulated due to exports, was set aside. It is against this order that the present appeal alongwith stay application has been filed.
2. Heard both the sides.
2.1 Ms. Surbhi Sinha, Advocate, the learned Counsel for the Appellant made the following submissions.
(1) The refund order has been set aside by CCE (Appeals) is the grounds that
(a) since the refund claim is for quarter July 2007 to September 2007 and in some cases, the date of export is after September 2007, the refund is not admissible ; and
(b) the original shipping bills, duly certified by the customs officer or duty certified photocopies thereof have not been submitted alongwith the refund claim. The department has neither specified the exports which had taken place beyond July 2007 September 2007 period, nor has quantified the refund claim to be rejected on the grounds mentioned in the Appellate order. In absence of such quantification, rejection of the entire refund claim is highly irregular.
(2) The Appellant had filed refund claim for July 2007 September 2007 quarter in respect of the consignments exported where the let export order had been passed during this period. As per Honble Supreme Courts judgment in case of Union of India vs. Asian Food Industries reported in 2006 (204) E.L.T. 8 (S.C.), the relevant date of export is the date of let export order.
(3) Notification No. 41/07-ST dated 6/10/07 prescribes conditions for grant of refund of service tax on services used for export of goods and clause (e) of para 2 provides that the said goods shall be deemed to have been exported on the date on which the proper officer of customs makes an order permitting clearance and loading of the said goods for export under Section 51 of Customs Act, which is nothing but, the date of let export order. The Appellant had relied on clause (e) of para 2 of the Notification No. 41/07-ST dated 6/10/07 as part of the refund claim pertains to unutilised service tax credit.
(4) The grounds for setting the Assistant Commissioners order sanctioning the refund claim, as mentioned in the impugned order-in-appeal are at the best, procedural irregularity, for which refund claim cannot be rejected. In this regard, reliance is placed on the Tribunals order in case of Unique Pharmaceutical Laboratories vs. CCE, Bombay reported in 1994 (74) E.L.T. 925 (Tribunal) and also in case of Philco Exports vs. CCE, New Delhi reported in 2009 (234) E.L.T. 568 (Tri. Del.).
(5) The Appellant in the memorandum of cross objection, filed before CCE (Appeals) in respect of the Departments appeal had mentioned that since the original copies of shipping bills are required to be submitted before the Export Promotion Council and since copies certified by Customs Officers are not received in time, they had enclosed self certified copies of shipping bills alongwith the refund claim and subsequently when the copies of shipping bills duly certified by Customs officers were received, the same had been enclosed with the cross objection. Therefore the CCE (Appeals)s finding that customs certified copies of shipping bills were not produced, is incorrect and just because these copies of shipping bills could not be submitted with the refund claim, the same cannot be rejected. In fact para 13.1 to 13.7 of Chapter 7 Part II of CBECs Central Excise Manual, 2005 mentions self attested copies of shipping bills as acceptable documents.
(6) As per the Boards Circular No. 220/54/96-CX dated 4/6/96 cash refund of unutilized Cenvat credit is an incentive given to manufacturers and exporters and non grant of the same effects the competitiveness of India Industry in international market. In view of this, it is highly improper to set aside the refund order only for procedural irregularity.
2.2.1 She prayed that the impugned order be set aside.
2.2 Shri R.K. Mishra, the learned Departmental Representative, reiterating the CCE (Appeals)s findings in the impugned order, made the following submissions.
(1) The cash refund of unutilised accumulated credit due to export is governed by Notification No. 5/06-CE (NT) dated 14/3/06 issued under Rule 5 of the Cenvat Credit Rules, 2004. As per condition 2 of this notification, in case of units other than 100% EOUs, such claims for refund cannot be submitted more than once for any quarter in a calendar year. Since the claim in this case was for July 2007 September 2007 quarter, the same can be only for the goods actually shipped during this period while the refund claim includes the exports where actual shipments were after September 2007.
(2) The Appellant did not submit the copies of Shipping Bills, certified by the Customs Officers alongwith the refund claim.
(3) The date of export is the date on which the ship containing the export goods leaves.
3. I have carefully considered the submissions from both the sides and perused the records. The Assistant Commissioner under Rule 5 of Cenvat Credit Rules, 2004 vide order dated 23/6/2008 had allowed cash refund of the accumulated credit amounting to Rs. 39,87,276/- in respect of clearances under ARE-1 & ARE-2 for exports during July 2007 September 2007 period. The CCE (Appeals) has set aside the Assistant Commissioners order and disallowed the refund on the following grounds (1) The refund claim under Rule 5 of Cenvat Credit Rules, 2004 is governed by Notification No. 5/2006 CE (NT) dated 14/3/06 issued under this rule according to which exporter (other than a 100% EOU) is required to file refund claim not more than once for any quarter in a calendar year. The goods in question were cleared for export during July 2007 September 2007 but in some cases, the date of export is not within the July September 2007 quarter. When the date of export is not within the quarter the refund is not admissible during the said quarter. The date of export, as defined in Explanation B to Section 11B of Central Excise Act, 1944, in case of goods exported out of India when refund of excise duty paid is available in respect of excisable material used in the manufacture of such goods, is the date on which the ship/aircraft or while the goods are loaded, leaves India.
(2) The copies of shipping bills duly certified by the Customs Officers were not enclosed with the refund claim. Though the Appellant submitted that they have received the Customs certified copies of shipping bills, the relevant rule in this regard is very clear that the same have to be submitted alongwith the refund claim. Therefore the refund is not admissible.
4. The cash refund of Cenvat credit accumulated due to exports, under Rule 5 of the Cenvat Credit Rules, 2004, is governed by the procedure and conditions prescribed in this regard in Notification No. 5/2006 CE (NT) dated 14/3/06, the relevant portion of which is reproduced below :-
Refund of Cenvat credit Procedure 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 (N.T.), 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 Rules, 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. 4.1 From a reading of the Notification it is clear that
(a) the refund claim under Rule 5 of Cenvat Credit Rules, 2004, subject to fulfilment of conditions prescribed in the Notification, has to be filed not more than once for any quarter in a calendar year in a form prescribed in the notification, alongwith the relevant documents, and within the limitation period prescribed in Section 11B of Central Excise Act, 1944,
(b) the refund allowed is of Cenvat credit in respect of input or input services used in the manufacture of finished goods cleared for export under bond or letter of undertaking, and the same is not linked with the date on which the ship or aircraft in which the export goods are loaded leaves India, which, as per Explanation (B) to Section 11B is the relevant date for counting the limitation period of one year prescribed for filing of the refund claim ; and
(c) While the refund claim can be filed in respect of goods cleared for export under bond/letter of undertaking during a quarter, it has to be filed only after export of the goods out of India, as the application for refund must be accompanied by shipping bills duly certified by customs officers that the goods have been exported.
5. In this case, out of 70 export consignments cleared for export during July September 2007 period, in 11 consignments, the vessel in which the goods had been loaded sailed in October 2007. In other cases the vessel carrying the export goods left during July 2007 September 2007 period. Since the refund claim has been filed on 5/5/08, the same, in respect of all these export consignments, is within the prescribed limitation period, and, in fact, this is not the allegation of the Department. There is no allegation that the condition 2,4,5 or 6 are not satisfied. Since as per the provisions of the notification, the refund of unutilised Cenvat credit is admissible in respect of inputs or input services used in manufacture of final products, which are cleared for export under bond or letter of undertaking, I am, prima facie, of the view that when refund claim has been filed in respect of the 70 consignments cleared for export during July 2007 September 2007, within the prescribed limitation period, and by the time the refund claim was filed, the goods had already been exported out of India, refund in respect of 11 consignments cannot be denied just because the same were physically exported in October 2007.
6. Another ground for denial of refund is that the copies of shipping bills duly certified by the customs officers regarding export of the goods were not enclosed alongwith the refund application. While it is true that alongwith the refund application, only self certified copies of shipping bills were enclosed, but as mentioned in the impugned order-in-appeal, the customs certified copies were produced subsequently. I am prima facie of the view that non-production of customs certified copies of shipping bills alongwith the refund application is only a remediable defect for which the refund claim cannot be denied when subsequently the customs certified copies of shipping bills were produced. A substantive claim cannot be denied for a minor procedural violation.
7. In view of the above discussion, I am of the view that there is merit in the appellants plea that the refund order has been correctly sanctioned by the Asst. Commissioner. Therefore, the impugned order deserves, no merits, hence set aside by allowing the appeal with consequential relief.
(Dictated and pronounced in the open court)
(Ashok Jindal) Member (Judicial)
Bhanu
2
E/1839/2009-EX(SM)