Custom, Excise & Service Tax Tribunal
Hyderabad-I vs Aurobindo Pharma Ltd Unit V I I I on 24 September, 2018
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Appeal No: E/30719/2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Appeal No. E/30719/2017
(Arising out of Order-in-Appeal No.HYD-EXCUS-001-APP-151-16-17 dated 17.03.2017 passed
by CCCE (Appeals), Hyderabad)
CCCE & ST, Hyderabad - I ..... Appellant(s)
Vs.
Aurobindo Pharma Ltd Unit VIII ..... Respondent(s)
Appearance Shri A.V.L.N. Chary, Superintendent/AR for the Appellant. Shri Sudhakar R. Challa & Ms. K. Sandhya Reddy, Advocates for the Respondent.
Coram:
HON'BLE Mr. M.V.Ravindran, MEMBER (JUDICIAL) HON'BLE Mr. P. Venkata Subba Rao, MEMBER (TECHNICAL) Date of Hearing: 24.09.2018 Date of Decision: 24.09.2018 FINAL ORDER No. A/31254/2018 [Order per: P.V. Subba Rao.]
1. This appeal has been preferred by the Revenue against the Order-in-
Appeal No. HYD-EXCUS-001-APP-151-16-17 dated 17.03.2017.
2. The facts of the case in brief are that the appellant herein are manufacturers of pharmaceuticals. They have also supplied some goods to 100% EOUs and claimed refund of CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 (herein after referred to as CCR) for the period October, 20014 to December, 2014. This refund was rejected by the original authority on the ground that Rule 5 of CCR read with Notification No.27/2012-CE (NT) dated 18.06.2012 (which prescribes the conditions for sanctioning of refund) grants refund of accumulated CENVAT credit only in respect of exports and not in respect of supplies to 100% EOUs. Such supplies are treated as deemed exports but the deemed exports were not (2) Appeal No: E/30719/2017 specifically covered by Rule 5 and therefore they are not entitled for refund of the CENVAT credit. The original authority has also relied on the fact that through Notification No.6/2015-CE (NT) dated 01.03.2015 a new explanation clause (1A) has been introduced as follows:
"Clause (1A) - Export goods means any goods which are taken out of India to a place outside India"
3. Thus it was a contention of the lower authority that the explanation only clarified the position which already existed that the export goods did not include supplies to 100% EOUs which are deemed exports only and therefore no refund of accumulated CENVAT credit under CCR is admissible. Aggrieved, the appellant filed an appeal before the first appellate authority who vide the impugned order held as follows:
"6. It is evident that by the above referred amendments to Rule 5 of CCR and Rule 18 of the CER, 2002 substantive changes in law have been sought to be effected as regards the meaning attached to the term 'export' in Rule 5 of CCR and Rule 19 of CER, 2002. I find that the clearances made in respect of the claims involved in the appeal pertain to the period October 2014 to December 2014. The said period is prior to the amendment in law carried out as above. During the relevant period, Rule 5 of the CCR and Notification No. 27/2012-CE (NT) dated 18.06.2012 had prescribed refund of credit of duty paid on the inputs and tax paid on input services which had been used in the manufacture of final products which were cleared for export under bond or under LUT. It is not disputed that the subject goods had, in fact, been removed under ARE-3's against within the provisions of Rule 20 of the CER, 2002. Rule 5 of CCR, 2004 had not, at the material time, explicitly excluded deemed exports from the definition of exports as has been made clear by the amendment made in Rule 5 after 01.03.2015 which further has made the intention of the Government clearer. The said amendment in Rule 5 appears to be prospective only in the absence of anything contrary. Therefore, there is no legal basis to exclude deemed exports from Rule 5 and the appellant has to be held to be eligible for the refund of accumulated CENVAT credit in terms of Rule 5 of CCR, 2004 as it stood at the material time. I also find that GOI in the case of Bhuwalika Steel Industries reported in [2014 (311) ELT 971 GOI] had held that clearances made to 100% EOU were to be treated as physical exports. Though the said decision is in the context of Rule 18 of the CER, 2002 the definition given to the 'exports' is relevant to the Rule 5 of the CCR, 2004 as well. The Hon'ble Gujarat High Court, in the latest case of Commissioner Vs Metflow Cast (P) Ltd, reported in [2016 (331) ELT 355 (Guj)] has held that goods cleared to 100% EOU can be treated as exports for the purpose of claim of refund of unutilized CENVAT credit. Similarly, in the case of E I Dupont India (P) Ltd Vs Union of India reported in [2014 (305) ELT 282 (Guj)] also, the Hon'ble Gujarat High Court had held earlier that deemed exports were eligible for refund under Rule 5. Similar view had also been taken in the case of CCE Vs NBM Industries reported in [2012 (276) ELT 9 (Guj)] and in the case of CCE Vs Shilpa Copper Wire Industries reported in [2011 (269) ELT 17 (Guj)]. Though, I find that the Hon'ble Madras High Court had taken a different view in the case of BAPL Industries Vs UOI (3) Appeal No: E/30719/2017 reported in [2007 (211) ELT 23 (Mad)], I respectfully note that the decision of the Hon'ble Gujarat High Court is the latest on the matter which is also in consonance with the view of GOI in the revision case referred above and in tune with the law as was sought to be amended by the amendments effected with effect from 01.03.2015 in Rule 5 of CCR, 2004.
7. The Hyderabad Bench of the Hon'ble CESTAT on an identical issue, while referring to the decisions cited supra, has held vide final order No.A/30890- 30891/2016 dated 27.09.2016 that such clearances should be treated as exports as per the decisions cited in paragraph 6 herein above and that refund of accumulated CENVAT credit under Rule 5 of CCR, 2004 in respect of such goods cleared to 100% EOU is admissible. Accordingly, I hold that the appellant is entitled to the refund of the accumulated CENVAT credit under Rule 5 of the CCR, 2004 on the subject clearance of goods made to 100% EOUs and that the appeal is, accordingly, liable to be allowed."
4. Aggrieved by the impugned order this appeal has been filed by the revenue. The learned departmental representative argued that refund cannot be sanctioned beyond the scope of Rule 5 of the CCR which did not provide for refund of accumulated credit in case of deemed exports by way of supply to 100% EOUs. Therefore, the first appellate authority has erred in holding such a refund is admissible and the Order-in-Appeal may be set aside.
5. Learned counsel for the respondent submits that the period in question is October 2014 to December 2014 which clearly falls prior to the amendment of Rule 5 of CCR. During this period the supplies to 100% EOUs were not excluded from the scope of Rule 5. He further draws our attention to the judgment of the Hon'ble Apex Court in the case of Commissioner Vs Amitex Silk Mills Pvt Ltd [2010 (254) ELT A98 (SC)] in which it was held that deemed exports should be treated on par with physical exports. Relying on the judgment of the Hon'ble Apex Court, this Bench had, in Final Order A/30890-30891/2016 dated 27.09.2016 in the case of Sai Polymers [2017 (5) TMI 671 (CESTAT-Hyd)] had held that for the period prior to the introduction of explanation (1A) to Rule 5 of CCR, supplies to 100% EOU will entitle the assessee to refund of accumulated credit under Rule 5. Relying on this order of this Bench, the first appellate authority has ruled in favour of the respondent herein.
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Appeal No: E/30719/2017
6. We have examined the matter and the arguments on the both sides. We find that in an identical matter in the case of Sai Polymers (supra) this very bench had held that Rule 5 of CCR also entitles one to refund of CENVAT credit in case of deemed exports by way of supply to 100% EOU prior to the introduction of explanation (1A). We find no reason to deviate from the decision of this Bench in this case. We follow the ratio of this decision and find that the impugned order does not suffer from any infirmity and find that the appeal is liable to be rejected and we do so.
7. The appeal is rejected and the impugned order is upheld.
(Operative part of this order was pronounced in the open court on conclusion of hearing) (P.VENKATA SUBBA RAO) (M.V. RAVINDRAN) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Veda