Custom, Excise & Service Tax Tribunal
Guntur - G S T vs Southern Rocks And Minerals Pvt Ltd on 6 August, 2018
(1)
Appeal No: E/30095/2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Appeal No. E/30095/2018
(Arising out of Order-in-Appeal No.VIZ-EXCUS-003-APP-056-17-18 dated 30.10.2017 passed
by CCCE & ST, Vishakapatnam)
CCT, Guntur ..... Appellant(s)
Vs.
Southern Rocks and Minerals Pvt Ltd ..... Respondent(s)
Appearance Shri B. Guna Ranjan, Superintendent/AR for the Appellant. Shri K.A.S.V. Prasad, Advocate for the Respondent.
Coram:
HON'BLE Mr. M.V.Ravindran, MEMBER (JUDICIAL) HON'BLE Mr. P. Venkata Subba Rao, MEMBER (TECHNICAL) Date of Hearing: 29.05.2018 Date of Decision: 06.08.2018 FINAL ORDER No. A/30832/2018 [Order per: P.V. Subba Rao.]
1. This appeal is filed by the Revenue in Order-in-Appeal No.VIZ-EXCUS-
003-APP-056-17-18 dated 30.10.2017.
2. Heard both sides and perused the records. The issue in brief, is that the respondents herein are a 100% EOU and are eligible for refund of CENVAT credit under Rule 5 of CENVAT Credit Rules r/w Notification No.27/2012-CE dated 18.06.2012. They had filed a refund claim before the Original Authority which was rejected on three grounds.
(a) That as per the Condition No. 2(g) of the notification, the amount of refund claim cannot be more than the amount lying in (2) Appeal No: E/30095/2018 balance at the end of the quarter for which the refund claim is being made or at the time of filing of the refund claim, whichever is less. On the date of filing of refund claim, respondents had no credit balance in their books of accounts.
(b) Condition No. 2(h) of the notification stipulates that the amount of credit that is claimed as refund under Rule 5 of the said Rules shall be debited by the claimant at the time of making the claim from the CENVAT credit.
(c) The application was filed beyond the time limit prescribed under Section 11B r/w clause 3(b) of the Notification No.27/2012-CE.
3. Aggrieved, the appellant filed an appeal before the first appellate authority who vide the impugned Order-in-Appeal allowed the appeal observing that the Rule 5 of the CENVAT Credit Rules does not prescribe any time frame and as such the time prescribed for filing refund claim under notification is only for the sake of convenience and any deviation from this time limit does not alter from eligibility of availing the refund. Hence, refund claim filed by the appellant therein does not suffer from any infirmity and they are entitled to the refund. He further observed that refund of accumulated credit is one of the mechanisms to decrease price of Indian goods in the international market and if the refund is not allowed and the appellant would have to build these into the cost of the final product and it leads to export of taxes and which makes Indian goods costlier in the international market. He, therefore, held that the substantial benefit of export of goods should not be denied for mere procedural violations. Relying on the judgment of the Hon'ble Supreme Court in the case of Mangalore Chemicals and Fertilizers Ltd [1991 (55) ELT 437 (SC)], he sought to draw (3) Appeal No: E/30095/2018 the distinction between the procedural conditions of technical nature and a substantive conditions in interpreting the Statute and held that the substantive benefit cannot be denied on technical grounds. So the Learned Commissioner (Appeals) allowed refund of CENVAT credit for the period April, 2012 to March, 2015.
4. The Revenue is aggrieved by this Order of first appellate authority and appealed on the following grounds.
(1) Assessee had irregularly availed CENVAT credit of Rs.1,38,92,116/- as per the audit report and when pointed out, they had reversed this amount in the month of February, 2016.
Therefore on 31.03.2016 amount of credit available in their balance is zero (0).
(2) Condition 2(g) of notification stipulates that amount of refund claim shall not be more than the amount lying in the balance at the end of the quarter for which the refund claim is being made or at the time of availing refund claim, whichever is less. In this case, on the date of availing of the refund claim, the balance was zero and therefore this condition was not fulfilled. (3) It was also necessary for the appellant to debit the amount claimed as refund while making the claim as per condition 2(h) of the notification which was not fulfilled.
(4) Any notification is an exception to the general law and must be strictly construed unless such strict instruction gives result to absurd results as held by Hon'ble Supreme Court in the case of Parle Export Pvt Ltd [1988 (38) ELT 741 (SC)]. Thus in this (4) Appeal No: E/30095/2018 case, the appellant is not entitled to refund on the substantive grounds.
5. In the instant case, assessee filed refund claim on 31.03.2016. Later, they reversed the claim on 24.06.2016 for the period April, 2012 to March, 2015 being the accumulated credit under Rule 5 of the CENVAT Credit Rules. As per the notification, the manufacturer or provider of output service cannot submit more than one claim of refund for every quarter i.e., not more than 4 claims per year and there is no bar in filing two claims or a single annual claim. The notification further stipulates in condition 3(b) that the application along with annexures must be filed before the expiry of the period specified in Section 11B of Central Excise Act. In this case, the application for refund was filed after the period specified in Section 11B and the Learned Commissioner (Appeals) has erred in holding that the notification does not prescribe the time limit. Therefore, the Revenue prayed that Order-in-Appeal may be set aside and the refund application must be set aside.
6. During personal hearing, Learned Departmental Representative reiterated the above arguments and asserted that the refund is not sanctionable on merits as well as the question of time limit. Learned Counsel for the Respondent submitted a copy of their letter dated 11.04.2016 to the Asst. Commissioner of Central Excise, Ongole, in which it was explained that they met the Range Superintendent and asked him about the procedures for refund as they were new to the process. When they filed the refund claim they were under the bona fide impression that the reversal of credit was in view of the Notification No.27/2012-CE dated 18.06.2012 but only learnt later that the reversal of credit was on account of alleged irregular availment (5) Appeal No: E/30095/2018 of CENVAT credit. This reversal was done only on account of pressure from the Range Superintendent. The simple question to be decided is whether the first appellate authority was correct in reversing the decision of the lower authority and sanctioning refund of the CENVAT credit accumulated by the appellant. We have considered the arguments on both sides. Refund of CENVAT credit is available as per Rule 5 of the CENVAT Credit Rules, 2004. Subject to procedure, safeguards, conditions and limitations as may be specified by the Board by notification in the official gazette. Thus it is clear that eligibility of refund under the Rules is subject to conditions which may be entitled by the Board. The notification which is issued by the Government or the Board is a subordinate Legislation. Thus there is a well established mechanism for reviewing whether or not the conditions, safeguards, procedures and limitations imposed by the notifications are reasonable and are within the powers given to the Government by the Board. Hence, powers of framing rules or issuing notifications are given to the Government which is answerable to the Parliament. It is also well known that if the Parliament feels that the notifications required amendment, they direct the Government to do so. This power of deciding or amending or revising the conditions, safeguards, limitations, etc, is not given to either Quasi Judicial Authorities or to the officers. They are bound by these notifications as they are drafted. The first appellate authority has erred in holding that the Rule 5 of the CENVAT Credit Rules does not prescribe any conditions or restrictions. In fact, it does delegate the power of deciding these conditions to the Board. The first appellate authority or any other Quasi Judicial Authority has no right to amend or modify the conditions of the notifications even if it is his opinion that the conditions or notifications are unreasonable or are not (6) Appeal No: E/30095/2018 conducive to promote the exports from India. Unfortunately the first appellate authority took this position and decided to relax the conditions laid down in the notification. The five member Constitutional Bench of the Apex Court in the case of Commissioner of Customs (imports), Mumbai Vs M/s Dilip Kumar & Co in Civil Appeal No.3327 of 2007 held that "20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes.........."
25. ............ equity has no place in interpretation of a tax statute. Strictly, one has to look to the language used; there is no room for searching intendment nor drawing any presumption."
7. The learned first appellate authority has clearly erred in sanctioning the refund taking a larger view of what is good to promote exports, etc., and such perceived "equity" has no place in interpretation of a fiscal statute and the notification must be strictly construed. We, therefore, find that the Order-in-Appeal needs to be set aside and we do so.
8. The appeal is allowed and the Order-in-Appeal is set aside.
(Pronounced in the Open Court on 06.08.2018)
(P.VENKATA SUBBA RAO) (M.V. RAVINDRAN)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
Veda