Custom, Excise & Service Tax Tribunal
Prime Progression Exports And Services ... vs Commissioner Of Central Excise, ... on 14 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/22685/2014-SM [Arising out of Order-in-Appeal No. 493/2014 dated 30/06/2014 passed by the Commissioner of Central Excise, Bangalore-I (Appeal)] Prime Progression Exports And Services Pvt. Ltd. No.323, Amulya Mansion 8th Main, 2nd Cross, BEML Layout, Kundalahalli Main Road Bangalore 560 066 Karnataka Appellant(s) Versus Commissioner of Central Excise, Service Tax And Customs Bangalore-II PB 5400, CR Building, Queens Road, Bangalore - 560 001 Karnataka Respondent(s)
Appearance:
Shri Chidananda Urs, Advocate #520, Amruth Nivas, 7th Main, 13th Cross, RMV 2nd Stage, Dollars Colony, Bangalore 560 094 For the Appellant Smt Ezhil Mathi, AR For the Respondent Date of Hearing: 14/12/2016 Date of Decision: 14/12/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21461 / 2016 Per: S.S GARG The present appeal is directed against the impugned order dated 30.06.2014 passed by the Commissioner (Appeals) thereby the Commissioner (Appeals) has allowed the appeal of the Department and set aside the Order-in-Original passed by the Assistant Commissioner. Briefly the facts of the case are that the appellant is engaged in the manufacture of Wet HIDE Liner falling under Chapter 39 of the CETA 1985. The appellant filed refund of accumulated cenvat credit of Rs. 4,69,399/- (Rupees Four Lakhs Sixty Nine Thousand Three Hundred and Ninety Nine only) for the quarter ending March 2010 under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006 CE (NT) on 07.06.2010. The sanctioning authority allowed the refund of Rs. 4,58,662/- (Rupees Four Lakhs Fifty Eight Thousand Six Hundred and Sixty Two only) under Rule 5. Aggrieved by the said order, Department filed an appeal before the Commissioner (Appeals) and the Commissioner (Appeals) vide order dated 30.06.2014 allowed the appeal and set aside the Order-in-Original. Aggrieved by the said order, the appellant has filed the present appeal.
2. Learned counsel for the appellant submitted that the appellant has filed refund claim as per Rule 5 of the Cenvat Credit Rules 2004 read with Notification 5/2006-CE (NT) dated 14.03.2006 and the refund claim was sanctioned by the sanctioning authority but thereafter the order of the sanctioning authority was reviewed by the Commissioner of Central Excise under Section 35E(2) of the Act and the appeal was filed before the Commissioner (Appeals) and the Commissioner (Appeals) has wrongly allowed the appeal and set aside the order sanctioning the refund. In order to appreciate the controversy it is pertinent to examine the Rule 5 of the Cenvat Credit Rules 2004 and the Notification 5/2006. The provisions of Rule 5 as it existed at the relevant time are reproduced herein below:
Rule 8[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 CENAT 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 Services Rules, 2005.] The conditions as prescribed in Notification 5/2006 are reproduced herein below:
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. 2.1. Learned counsel for the appellant submitted that the appellant has furnished all the relevant documents to the refund sanctioning authority and the sanctioning authority before granting the refund has considered all the documents as required under the Notification 5/2006. He also submitted that the department has not brought any evidence on records to show that the final product is not exported in accordance with the provisions of law. The appellants have also produced the proof of export and the input and input services on which credit has been availed and the same has been used in the manufacture of goods exported. He further submitted that the conditions specified in the notification have been taken into consideration by the original authority while sanctioning the refund. He also submitted that in all the cases sanctioning authority has observed that the assessee has fulfilled all the conditions stipulated in the Notification No. 5/2006 dated 14.03.2006 and therefore refund was sanctioned. He also submitted that there is a clear finding by the Assistant Commissioner that the local clearance is only 3.87% and the balance 96.13% of the turnover relates to export of goods. The learned counsel also submitted that the impugned order is beyond the grounds on which permission was granted to prefer an appeal in the review order and the impugned order has traversed beyond the grounds on which the appeal were preferred by the appellant. He also submitted that the proceedings initiated under Section 35E(2) cannot be independently sustained when the show-cause notice is not issued for recovery of erroneous refund under Section 11A of the Act.
2.2. Learned counsel for the appellant has placed on record that the appellants own case on an identical issue, this Tribunal vide its order dated 27.05.2016 has allowed four appeals of the appellant by setting aside the orders of the Commissioner (Appeals).
3. On the other hand the learned AR submitted that for recovery of refund erroneously granted, there is no need to issue show-cause notice under Section 11A and the order of the appellate authority is sufficient to affect the recovery from the appellant.
4. I have heard the learned counsel for the parties and perused the records. The issue involved in the present case is whether the order of refund sanctioned by the JAC is in accordance with Rule 5 of the Cenvat Credit Rules 2004 read with Notification No. 5/2006 dated 14.03.2006. Further I find that the Assistant Commissioner has sanctioned the refund claims after satisfying the conditions as contained in the Notification 5/2006 dated 14.03.2006 and there is no infirmity in the orders granting refund where the Commissioner (Appeals) has wrongly observed that the original authority has failed to bring on record in the impugned order whether input or input services are used in relation to the manufacture of exported goods. Therefore, in my considered opinion, the appellant have furnished all the relevant documents to the satisfaction of the sanctioning authority and the sanctioning authority has clearly held that the appellant has fulfilled all the conditions stipulated in the Notification 5/2006 dated 14.03.2006 and there is no legally sustainable ground on which validly sanctioned refund order should be set aside and therefore in my considered view, the findings returned by the Commissioner (Appeals) on merit needs to be set aside and I set aside the same. Therefore keeping in view the facts and circumstances and the Tribunals order dated 27.05.2016, I allow the appeal of the appellant with consequential relief.
(Operative portion of the Order was pronounced in Open Court on 14/12/2016) (S.S GARG) JUDICIAL MEMBER iss