Custom, Excise & Service Tax Tribunal
Great India Steel Fabricators vs Panchkula on 10 August, 2018
1
Appeal No.E/60839 & 60838/2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
SCO 147-148, SECTOR 17-C, CHANDIGARH-160017
SINGLE MEMBER BENCH
Court-II
Appeal No. E/60839 & 60838/2017
(Arising out of OIA No.114-115/CE/DLH/2017 dt.22.05.2017
passed by the CCE(Appeals), New Delhi)
Date of Hearing: 16.02.2018
Date of decision: 10.08.2018
Great India Steel Fabricators Appellant
Vs.
CCE, Panchkula Respondent
Present for the Appellant: Shri Jagmohan Bansal, Advocate Present for the Respondent: Shri H. Singh, AR Coram: Hon'ble Mr.Devender Singh, Member (Technical) FINAL ORDER NO.62595-62596/2018 PER: DEVENDER SINGH The brief facts of the case are that the appellant are engaged in the manufacture of goods falling under chapters 72,73, 83 & 84 of Central Excise Tariff Act and are registered with the Department.
2. The appellant had filed two refund claims for the quarter ending January to March, 2015 and April and June, 2015 for Rs.69,89,055/- and Rs.24,28,424/- respectively The Refund was sought on the ground that they were supplying the goods to Mega Power Project under International Competitive Bidding, which is deemed export in terms of Foreign Trade Policy. The refund claims were filed in terms of Rule 5 of Cenvat Credit Rules, 2004 (in brief, CCR). The adjudicating authority rejected both the refund claims against which 2 Appeal No.E/60839 & 60838/2017 the appellant went in appeal. In appeal before the Commissioner (Appeals), the refund claims for January and February, 20015 were allowed to the appellant but the claims for the month of March, 2015 was rejected. Further, the order of the adjudicating authority rejecting refund for the quarter April to June, 2015 was upheld. Aggrieved from the same, the appellant have filed these appeals.
3. Ld. Advocate for the appellant submits that the appellant cleared the finished goods without payment of duty under Notification No.12/12 dated 1.3.2012 which exempts the goods supplied to Mega Power Projects. The contention of the appellant is that Rule 5 of Cenvat Credit Rules, 2004 does not deal with deemed exports and refunds are governed by parent Act. He further argued that Section 11B is a complete code in itself to deal with refund of duty. He invited attention to the clause (c) of proviso to sub-section (2) of Section 11B of the Act and contended that the refund is governed by Section 11B of the Act, which is principal legislation and not by Rule
5. He contended that Rule 5 of CCR being subordinate legislation cannot supplant the principal legislation and hence principal legislation should prevail. Contention is that since there was no dispute about legality of the Cenvat credit availed by the appellant, the Revenue was misinterpreting the Section 11B because it requires only availing of credit and does not deal with refund. He further submitted that two principles of law were involved: (i) that the benefit given by one hand cannot be denied by the other hand. Credit which has been permitted vis-a-vis inputs cannot be curtailed/denied; (ii) the provisions of Rule 3,4 & 5 of CCR and Section 11B and Notification No.12/12 are required to be interpreted harmoniously. He contended 3 Appeal No.E/60839 & 60838/2017 that Rule 5 makes Cenvat credit scheme otiose. In support of his contentions, he relied upon the following judgments:-
(i) Union of India vs. Uttam Steel Ltd.-2015 (319) ELT 598 (SC)
(ii) Lucid Colloids Ltd. vs. Union of India-2006 (200) ELT 377 (Raj.)
(iii) Malaysian Airlines vs. Union of India-2010 (262) ELT 192 (Bom)
(iv) British Airways-2013 (282) ELT (G.O.I.)
(v) Commissioner of Income Tax vs. Chemplast Sanmar Ltd.-2009 (314) ITR 231
(vi) Zenith Spinners vs. Union of India-2015 (326) ELT 97 (Guj.)
(vii) Union of India vs. Zenith Spinners-2015 (326) ELT 23 (SC.)
(viii) Cappithan Agencies s. CC, Chennai-VIII-2016 (336) ELT 524 (Mad)
(ix) Horizon Ferror Alloys Pvt.Ltd. vs. Union of India-2016 (340) ELT 27 (P&H)
(x) Bharat Earth Movers Ltd. vs. CC, Madras-I-2001 (129) ELT 580 (Mad)
(xi) Union of India vs. Suksha International & Nutan GAms & anr-
1989 (39) ELT 503 (SC)
(xii) Godawat Pan Masala Products I.P.Ltd. vs. Union of India-2004 (7) SCC 68
(xiii) British Airways Plc. Vs. Union of India-2002 (2) SCC 95
(xiv) Election Commission of India vs. Telegana Rastra Samithi -2011 (1) SCC 370.
4. Ld. AR submitted that after insertion of clause 1A in Explanation 1 to Rule 5 of CCR, 2004 by Notif.No.06/2015-CE (NT), refund is allowed only in respect of those exports where the goods are taken out of India to a place outside India. Ld.AR invited attention to the 4 Appeal No.E/60839 & 60838/2017 page 25 of the paper book and contended that refund claims were filed under Rule 5 of Cenvat Credit Rules, 2004 and not under Section 11B of Central Excise Act. He read out sub-section (2c) of Section 11B and emphasised the expression "refund of credit of duty used as inputs in accordance with rules made, or any notification issued, under this Act" in the said sub section. He further contended that based on said sub section, refund under Rule 5 of CCR is enabled by Section 11B(2c). In view of this sub-section, there is no contradiction in Section 11B, Rule 5 and the notification. He further argued that any change in Rule or notification is to be read with Section 11B and there is no conflict between Section 11B and the Rules. He also relied on the case law of Malaysian Airlines (supra) to argue that the primary statute empowers these rules and there was no conflict in Section 11B and the Rules. He also contended that the judgment of Lucid Colloids Ltd (supra) was not applicable as there was no contradiction between Section 11B and the notification.
5. Heard both sides and examined the record.
6. The common issue involved in these appeals is whether the goods supplied to a Mega Power Project, treated as deemed export in terms of Foreign Trade Policy, are eligible for refund under the provisions of Rule 5 of Cenvat Credit Rules, 2004 for the period from March, 2015 to June, 2015. For the sake of convenience, Rule 5 of Cenvat Credit Rules, 2004 is reproduced below:-
"RULE [5. Refund of CENVAT Credit. -- (1) A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as 5 Appeal No.E/60839 & 60838/2017 determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette :
(Export turnover of goods + Refund Net CENVAT = Export turnover of services) × amount Total turnover credit Where, -
(A) "Refund amount" means the maximum refund that is admissible;
(B) "Net CENVAT credit" means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider reduced by the amount reversed in terms of sub-rule (5C) of rule 3, during the relevant period; (C) "Export turnover of goods" means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking;
(D) "Export turnover of services" means the value of the export service calculated in the following manner, namely :-
Export turnover of services = payments received during the relevant period for export services + export services whose provision has been completed for which payment had been received in advance in any period prior to the relevant period - advances received for export services for which the provision of service has not been completed during the relevant period;
(E) "Total turnover" means sum total of the value of -
(a) all excisable goods cleared during the relevant period including exempted goods, dutiable goods and excisable goods exported;
(b) export turnover of services determined in terms of clause (D) of sub-rule (1) above and the value of all other services, during the relevant period; and
(c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed.
(2) This rule shall apply to exports made on or after the 1st April, 2012 :
Provided that the refund may be claimed under this rule, as existing, prior to the commencement of the CENVAT Credit (Third Amendment) Rules, 2012, within a period of one year from such commencement :
Provided further 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 and Service Tax Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate 6 Appeal No.E/60839 & 60838/2017 of service tax under the [Service Tax Rules, 1994] in respect of such tax.
Explanation 1. - For the purposes of this rule, -
(1) "export service" means a service which is provided as per [rule 6A of the Service Tax Rules, 1994];
[(1A) "export goods" means any goods which are to be taken out of India to a place outside India.] (2) "relevant period" means the period for which the claim is filed.
Explanation 2. - For the purposes of this rule, the value of services shall be determined in the same manner as the value for the purposes of sub-rules (3) and (3A) of rule 6 is determined.]"
7. For ease of reference, relevant portions of Section 11B (2) of Central Excise Act, 1944 are also extracted below:-
"(2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the [duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund :
Provided that the amount of [duty of excise and interest, if any, paid on such duty] as determined by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to -
(a) ------------------------------------
(b) ----------------------------------
(c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act;
(d) -------------------------------- "
8. The first appellate authority has rejected the claim for refund after 1.3.2015 on the basis of clause (1A) inserted in Explanation 1 to Rule 5 of the CCR vide Notification NO.6/15-CE dt.1.3.2015 by holding that the goods exported must be taken out of India to a place outside India and refund for export of goods defined under 7 Appeal No.E/60839 & 60838/2017 Foreign Trade Policy cannot be considered as export under amended Rule 5 of Cenvat Credit Rules. In other words, after insertion of clause A, refund of credit is admissible only for goods which have been physically exported out of India.
9. First contention of the appellant is that Rule 5 of CCR deals with only physical export of the goods and does not mandate that refund would not be allowed in other cases. It is also the contention of the appellant that Rule 5 is not applicable to them at all. I find that record reveals that the appellant had filed impugned refund claims under Rule 5 of CCR, which is the relevant provision for refund of cenvat credit. Record also shows that under Rule 5 ibid the appellant had filed the refund claim for the quarter January, 2015- March, 2015, which included the period prior to 1.3.2015, which had been allowed by the first appellate authority, but the refund after 1.3.2015 was rejected. Hence, the claim of the appellant that Rule 5 is not applicable to them is not tenable. As they themselves have filed both their claims under Rule 5 of CCR, both the lower authorities have correctly dealt with their claim in terms of that Rule. Further, the contention of the appellant that Rule 5 deals with only physical export of goods is untenable. Admittedly, prior to the amendment in Rule 5 brought about vide Notification No.6/15-CE, under Rule 5 refund has been allowed in respect of physical exports of goods as well as deemed exports. In view of the above factual position, it is clear that the amendment has been made with a view to restrict refund to the goods which are physically exported out of India and, by necessary implication, deemed exports have been disallowed the facility of refund of credit as a result of insertion of clause (1A). It is also 8 Appeal No.E/60839 & 60838/2017 settled principle of interpretation what has not been included in a particular provision by necessary implication stands excluded from that provision, even if it is not expressly excluded. The definition of export goods thus inserted makes legislative intent clear that refund should be allowed only in respect of physical export of goods and not for deemed exports. While interpreting the provisions for refund of Cenvat credit, the legislative intention, which is unambiguous, will have to be given effect to in consonance with the definition of export goods as contained in Rule 5.
10. The other contention of the appellant is that Section 11B of the Act governs refunds and Rule 5, which is subordinate to the principal legislation cannot supplant the principal legislation. I find no force in the argument of the appellant that Rule 5 of CCR is contradictory or in conflict with the Section 11B of the Central Excise Act and the Rule is supplanting the Section. Admittedly, refund of credit on inputs is enabled by provision to Section 11B (2) which reads as under:-
"(c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act."
A plain reading of the above provision shows that refund of unutilized credit on inputs is governed by rules made or any notification issued under Central Excise Act, 1944. Accordingly, Rules 5,5A and 5B of CCR, which are the only rules made for such refunds are in complete harmony with Section 11B (2) (c) of the Act since 9 Appeal No.E/60839 & 60838/2017 CCR, 2004 have been made under Section 37 of Central Excise Act, 1944. Thus, there is no contradiction or conflict between Section 11B and Rule 5 of Cenvat Credit Rules. As a result, the contention that Rule 5 is supplanting the Section 11B is patently fallacious. It is therefore clear that Section 11B allows refunds in accordance with Rule 5 of CCR and Notifications issued under the Act and any restrictions made by legislature in this Rule on any category of exports etc. are not contrary to the said Section.
10. Another contention of the appellant is that Section 11B requires only availing of credit and it does not deal with refund. Apart from the fact that such a contention hits the appellant's own argument that Section 11B is a self-contained code for refunds, the contention of the appellant is completely untenable for the following reason. Section 11B (2) (c) is worded very clearly that refund of credit of duty paid on inputs is allowed in accordance with rules made or any notification issued under Central Excise Act. The said sub-section deals with refund of credit on inputs in accordance with the rules and the argument that it deals with only availing of the credit is patently fallacious in view of clear and unambiguous wording of section. The question of refund of such credit emerges only after it has already been availed under Rule 3 of Cenvat Credit Rules. Related argument advanced by the appellant is that Rule 5 is not applicable as the principal statute overrides the Rule. The contention is that Rule 5 cannot supplant the Section but can only supplement the Section. I find that this argument of the appellant is made on the assumption that Section 11B permits refund and Rule 5 being contrary to the principal legislation should pave the way for said section. I find that 10 Appeal No.E/60839 & 60838/2017 in the instant case there is no conflict between the primary statute and the delegated provisions as the primary statute has made the provision of allowing the refunds as per Rule 5 of CCR and Notification issued under the Act and any restriction made in the said Rules on any category of exports imposed by legislature is in consonance with the Section 11B of the Act
11. Another argument advanced by the appellant is that the benefit of credit which was given by one hand cannot be denied by other hand and the credit which has been permitted cannot be curtailed or denied. I find that the argument of the Ld. Advocate, which leads to conclusion that the Ministry should not have issued such amendment in the Rule 5 by way of notification restricting the refund under the said Rule to physical export, does not appeal to me. In as much as I am not sitting in the capacity of law makers and as such, I cannot deal with the contention of the ld. Advocate. The Tribunal being a creature of the law is bound by the law created by the Government, which only requires interpretational skills in the hands of judiciary.
12. The appellant also contended that Rule 3, 4 and 5 of CCR and Section 11B of Central Excise Act and the notification should be interpreted harmoniously because the said Rule makes other provisions otiose or redundant. In this regard, the appellant have relied upon the judgment of the Hon'ble Supreme Court in the case of Election Commission of India (supra) and British Airways vs. Union of India (supra). Although these judgments are not in the specific context of Cenvat Credit Rules, 2004, the common principle in these 2 judgments is that effort should be made to interpret obviously 11 Appeal No.E/60839 & 60838/2017 repugnant provisions of statute so that each provision will have its play and, in the event of conflict harmonious construction should be given. As elaborated hereinabove, there is no contradiction between the Section 11B and Rule 5 of CCR. I also find that there is no contradiction or between the Rules 3, 4, and 5 of the Cenvat Credit Rules. Rules 3 and 4 deal with duties of which credit can taken and condition for allowing credit and its utilization. The provisions relating to the refund of credit for different categories in Rule 5A and Rule 5B enumerated and elaborate the purpose for and categories to which refund is permissible. The contention of the appellant that there is conflict between Rule 3,4 and 5 would have carried some weight had the credit become a vested right of the assessee for which claim of refund could be made. However, that is not so as has been held by the Larger Bench of this Tribunal in the case of Steel Strips vs. CCE, Ludhiana-2011 (269) ELT 257 (Tri.-LB). In that case, the question of refund of unutilized/accumulated credit under Rule 5 of CCR in the event of closure of a unit was examined by the larger bench of this Tribunal. In fact, the appellant had pleaded that whatever may be reason of accumulation of input credit, the remaining unutilized credit should be refunded. It is pertinent to mention that during the period, impugned in the said case, there was no express provision to grant refund of accumulated credit except in case of exports. The distinction between the physical exports and deemed exports also did not exist at that time. In these set of facts, the larger bench of this Tribunal held that the claim for refund was inconceivable when right to refund did not accrue under the law and claim for refund was not a matter of right unless vested in law. In this regard, the findings of 12 Appeal No.E/60839 & 60838/2017 the Tribunal in para 5.7. to 5.16 are highly relevant and the same are extracted below:-
"5.7 A distinction between provisions of statute which are of substantive character and are built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. An eligibility criteria to get refund calls for a strict construction, although construction of a condition thereof may be given a liberal meaning if the same is directory in nature. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can be reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed.
Refunds and Exemption are Governed by Rule of Strict Compliance 5.8 Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted.
Substance and Essence of Statute are Paramount
Considerations
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Appeal No.E/60839 & 60838/2017
5.9 The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the "substance" or "essence" of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential. In the cases of refund substantial compliance to the law granting refund is sine qua non.
Courts have to decide what the law is but not what it should be 5.10 In a plethora of cases, it has been stated by various judicial pronouncements that where, the language is clear, the intention of the legislature is to be gathered from the language used. It is not the duty of the court either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The court cannot add words to a statute or read words into it which are not there. The court cannot, on an assumption that there is a defect or an omission in the words used by the legislature, correct or make up assumed deficiency, when the words are clear and unambiguous. Courts have to decide what the law is and not what it should be. The courts adopt a construction which will carry out the obvious intention of the legislature but cannot set at naught legislative judgment because such course would be subversive of constitutional harmony [See : Union of India & Anr. v. Deokinandan Aggarwal].
No person has vested right in any course of procedure 5.11 No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner laid down by law. He has no right than to proceed according to the mandate of the statute governing the subject. Claim of refund is not a matter of right unless vested by law. That would depend upon the object of the statute and eligibility. The purpose for which law has been made and its nature, the intention of the legislature in making the provision, the relation of the particular provision to other provisions dealing with the subject including the language of the provision are considerable factors in arriving at the conclusion whether a particular claim is in accordance with law. No injustice or hardship can be raised as plea to claim refund in absence of statutory mandate in that behalf and no equity or good conscience influence fiscal courts without the same being embedded to the statutory provisions.
5.12 The question before the Larger Bench in Gauri Plasticulture (P) Ltd. - 2006 (202) E.L.T. 199 (Tri.-LB.) was whether duty debited in RG23A part II can be refunded in cash when the refund becomes otherwise due. The Larger Bench without recording the submissions of either side merely discussed outcome of various decisions beginning from Para 3 to 7 of the order and came to the conclusion 14 Appeal No.E/60839 & 60838/2017 in Para 10 of the reported order that if denial of credit has compelled an assessee to pay duty out of PLA, the refund of the same would be in cash to the extent of payment of duty in cash during that period. It was further held that if no cash payment towards duty were made through PLA and credit would have remained unutilized in the account books, such credit cannot be allowed by way of cash.
5.13 While arriving at the aforesaid conclusion, the Larger Bench in Para 11 of the order recorded the fact that in the case before them debit entry in credit account was made by the Appellants on 23-11-2000 while central excise registration was surrendered by the assessee in September 2000 i.e., before making the debit entry in RG-23 account. Further observation of the Bench was even if the amounts towards duty would not have been debited by them in the said account, the same would have been remained unutilized. As such, on the success of their appeal before the Commissioner (Appeals), they cannot claim the refund of the same in cash, inasmuch as on account of such debit entry, they have not discharged any duty out of PLA. If the said refund is granted to the appellants by way of cash, the same would amount to enrich him unjustifiably. It is well settled principles of law that what cannot be done directly should not be allowed to be done indirectly. On surrendering of their licence, the appellants were not allowed to claim the refund of the unutilized credit in the Modvat account, and the same would have lapsed. As such, utilization of the same towards payment of disputed demand of duty, after surrendering of their registration, has not led to a situation where the assessee was compelled not to use the credit for regular clearances and had to make payment from PLA. As such, in this case we find that the refund in cash is not to be allowed.
5.14 The Larger Bench also discussing various pronouncements in Para 3 to 7 of the order, viewed the matter in Para 8 as under :
"8. Detailed reading of the above Judgments, leads in to the fact that wherever the assessee was unable to utilize the credit on account of objection raised by the Department or actions taken by them by way of initiation of proceedings or paid duty out of modvat account at the Department's insistence, and for that reason, he had to pay duty in cash or out of the PLA, they would be entitled to refund of that credit in cash, on the dispute being ultimately settled in their favour. In the decisions holding that such refund in cash is not possible, it has been observed that there is no provision allowing refund of such credit in cash. However, we are not in agreement with the above proposition for the simple reason that there is also express no bar in the Modvat Rules to that extent We have to keep in mind that it is not the refund of unutilized credit, but the credit which has been used for payment of duty at the insistence of the revenue or has been reversed because the Department was of the view that the same is not available for utilization. This is a simple and basic principle of equity, justice and good conscience. Had the Department not prevented the assessee from utilizing the credit otherwise available to him, they would have been in a position to use the same towards payment of duty on their final product, which obligation they had to discharge from their PLA account. As such, on the success of their claim subsequently, if the assessee is maintaining Modvat credit and is in a position to use 15 Appeal No.E/60839 & 60838/2017 the same for future clearances, it should be normally be credited back in the same account from where it was debited i.e. RG-23A Part II account However, if an assessee is not able to use the credit on account of any reasons, whatsoever (which may be closure of his factory or final products being exempted, etc.) the refund becomes admissible in cash or by way of credit entry in PLA to the extent duty paid in cash or out of PLA during the relevant period."
5.15 The decision made in Gauri Plasticulture (P) Ltd. was called for on the question before the Larger Bench as framed in Para 1 thereof. At the cost of repetition it may be stated that the question before Larger Bench in that case was "whether duty debited in RG- 23 A Part II can be refunded in cash, when the refund becomes otherwise due" [Emphasis supplied]. But the conclusion in that case as per Para 10 was that if denial of credit has compelled an assessee to pay duty out of PLA, the refund of the same would be admissible in cash to the extent of payment of duty in cash during that period. However, if no cash payments towards duty were made through PLA and the credit would have remained unutilized in the account books, such credit cannot be allowed by way of cash. Such decision does not appear to have flown from the question appearing in Para 1 of the Larger Bench decision as stated aforesaid. Therefore such a decision has no attributes of a precedence not laying down the law for which present reference was warranted. It may further be stated that in Gouri Plasticulture's case the question had presupposed that refund was "otherwise due". But how such due arose, that does not come out from any of the paragraphs of the order reported in 2006 (202) E.L.T. 199 (Tri.-LB.). The present reference is not on the premise of refund otherwise due for which that has rightly been made for answer by Larger Bench. 5.16 Modvat law has codified procedure for adjustment of duty liability against Modvat Account. That is required to be carried out In accordance with law and unadjusted amount is not expressly permitted to be refunded. In absence of express provision to grant refund, that is difficult to entertain except in the case of export. There cannot be presumption that in the absence of debarment to make refund in other cases that is permissible. Refund results in outflow from treasury, which needs sanction of law and an order of refund for such purpose is sine qua non. Law has only recognized the event of export of goods for refund of Modvat credit as has been rightly pleaded by Revenue and present reference is neither the case of "otherwise due" of the refund nor the case of exported goods. Similarly absence of express grant in statute does not imply ipso facto entitlement to refund. So also absence of express grant is an implied bar for refund. When right to refund does not accrue under law, claim thereof is inconceivable. Therefore, present reference is to be answered negatively and in favour of Revenue since refund of unutilized credit is only permissible in case of export of goods and for no other reason whatsoever that may be. As has been stated earlier that equity, justice and good conscience are the guiding factors for Civil Courts, no fiscal Courts are governed by these concepts, the present reference is bound to be answered in favour of Revenue and it is answered accordingly." 16
Appeal No.E/60839 & 60838/2017 In view of above ruling of larger bench, I find no force in the argument advanced by the appellant. The specific inclusion of clause (1A) in Rule 5 bid clearly shows the legislative intent to allow refund facility to actual physical exports. As the right to refund for exports other than physical exports did not accrue under law, which in the impugned period is permitted for physical exports only, there is no conflict between Rule 3, 4 and 5 of Cenvat Credit Rules.
13. The appellant have also relied upon the judgment of Hon'ble Apex Court in the case of Godawat Pan Masala Products I.P.Ltd. (supra) to argue that the court must harmonise different parts of statute and it cannot be assumed that Parliament had given with one hand but took away by the other. I find that Rule 5 is in consonance with Section 11B (2) (c) of the Act. In the scheme of Cenvat Credit Rules, availment and utilization of credit are permitted from the assessee subject to condition mentioned in the said Rules. Refund in cash is exceptional provision meant for certain categories of assessees including those, who physically export the goods. Hence, the provision after 1.3.2015 which restricts the refund to the category of physical exports cannot be said to take away since the right to refund of Cenvat credit is not a vested right and they are allowed to utilize credit like any other assessee. In this context, in the case of Steel Strips (supra), this Tribunal also laid down that equity considerations are entirely out of place while interpreting tax law. The findings and ratio of the Tribunal as contained in para 5.3 of the said judgment, being pertinent to the matter at hand, are extracted below:-
17
Appeal No.E/60839 & 60838/2017 "5.3 Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity (Ref : State Bank of Travancore v. Commissioner of Income Tax (1986) 2 SCC 11, p.68. : AIR 1986 SC 757). It has also been said that if taxing provision is "so wanting in clarity that no meaning is reasonably clear, the court will be unable to regard it as of any effect." [Ref : IRC v. Ross and Coulter, (1948) 1 All ER616, p.625 (HL); referred to in Gursahai v. CIT, AIR 1963 SC 1062, p.
1064 : (1963) 3 SCR 893.]. It has also been held that in interpreting taxing statute, equitable considerations are entirely out of place nor can taxing statutes be interpreted on any presumptions or assumptions. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency. [Ref : Sales Tax Commissioner v. Modi Sugar Mills, AIR 1961 SC 1047, p. 105, CIT v. M. G. Mills - AIR 1971 SC 2434, p. 2435]."
14. Ld. Advocate also relied on the judgment of Hon'ble Bombay High Court in the case of Malaysian Airlines (supra) to argue that delegated legislation has to be read in the context of primary statute under which it is made and in the case of any conflict primary legislation prevails. In the said case, the provision relating to the penalty in Section 38(3) of the Finance Act, 1979 providing for penalty on carrier being not less than one fifth and extending three times of the amount of tax not paid while in Rule 11 of Foreign Travels Tax Rules, 1979 provision was made for penalty in such cases not to exceed Rs. 5,000/-. In the circumstance, Rule 11 was held to be contrary to the Section 38 (3) ibid and it was held that Rule 11 being sub-ordinate provision could not override primary legislation. In the present case, such conflict as was seen in the case of Malaysian Airlines (supra) does not exist. The provision in Section 11B empowers refund to be made in accordance with Rule and the notification and no provision of Rule 5 is in conflict with Section 11B. Hence, the ratio of the Malaysian Airlines (supra) is not applicable to the facts of this case.
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15. Ld. Advocate also relied upon the judgment of the Hon'ble Rajasthan High Court in the case of Lucid Colloids Ltd. vs. Union of India-2006 (200) ELT 377 (Raj.). In the said case, the issue related to fixing of interest rate under section 11B. Parent section provided that interest should be not below 10% and not exceeding 36% per annum. However, in the Rule 8(3) framed by the Central Government, it was provided that the interest would be at the rate of 2% per month or Rs.1,000 per day, whichever is higher. In this background, the Hon'ble court held that alternative mode of levy of interest per day was ultra vires to Section 11B. Since there is no conflict between Section 11B and Rule 5 of CCR as elaborated earlier, the ratio of the said case is not applicable to the present case.
16. The appellant have also relied upon the case law of UOI vs. Uttam Steels Ltd. (supra) to argue that in the case of refund, Section 11B has overriding effect. In the said case, the issue related to the limitation to be applied to rebate claims which had been filed on 20.12.1999 beyond the period of six months under Section 11B of the Act. However, the said Section was amended on 12.5.2000 when the period of six months was extended to one year. Since the rebate application was filed within a period of one year from the date of shipment, the respondent claimed that they were in time. Further, the Proviso to Rule 12 (1) of Central Excise Rules, 1944, which allowed the Commissioner to allow rebate even if some conditions had not been met. In these sets of facts, the Hon'ble Supreme Court by relying on the ratio of Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.) held that since the 19 Appeal No.E/60839 & 60838/2017 claims for rebate were made beyond the original period of six months, the respondents cannot avail of the extended period of one year on the subsequent amendment to Section 11B. Since there was conflict between said Rule and the Section, the Hon'ble Supreme Court held that subordinate legislation cannot dispense with requirement of Section 11B. In the present case, however, such conflict as was seen in the case of Uttam Steel (supra) is non-existent. The provision in section 11B empowers refund to be made in accordance with Rule and notification and no provision of Rule 5 is in conflict with Section 11B. Hence, the ratio of the Uttam Steel (supra) is not applicable to the facts of this case.
17. The appellant have also relied upon the judgment of Hon'ble Madras High Court in the case of Commissioner of Income Tax vs. Chemplast Sanmar Ltd. (supra) to argue that if Rule acts beyond what section contemplates, Rule must yield to the statute. As already discussed, there is no conflict or contradiction between the Rule 5 ibid and Section 11B and primary statute enables the refund as per Rules. Hence, the said judgment is not applicable to the facts of this case.
18. The appellant have also relied upon the judgment of Hon'ble Gujarat High Court in the case of Zenith Spinners (supra). In the said case, the appellant was availing the scheme under Rules 18 and 19 of Central Excise Rules ,2002 issued by the Central Government. However, the CBEC issued notification which prescribed certain conditions which rendered notification issued by Central Government redundant. It was held that CBEC cannot be permitted to issue such notification. In the present case, Cenvat Credit Rules have been 20 Appeal No.E/60839 & 60838/2017 issued by Central Government under Central Excise Act. Refund under Section 11B of Central Excise Act are enabled for credit of duty paid on inputs in accordance with the Rules made under the Act. Since there is no conflict between Rules and Section, hence the ratio of the said judgment is not applicable.
19. The appellant have relied upon the judgment of Hon'ble Madras High Court in the case of Cappithan Agencies (supra). However, the said decision is in the context of Customs Broking Licensing Regulation, 2013 (CBLR, 2013) and not in the context of Cenvat Credit Rules, 2004 under Central Excise Act. The issue in the cited case was whether Regulation 23 of CBLR, 2013 has been rendered otiose by misinterpreting Regulation 19 ibid. However, in the present case, there is no such conflict as the larger bench of the Tribunal in the case of Steel Strips (supra) has held that refund of unutilized credit is not a vested right. Law has only recognized physical exports as eligible for refunds and when right to refund does not accrue, the claim is thus inconceivable.
20. The appellants have also relied on the case of Bharat Earth Movers Ltd (supra) to argue that the provisions in statute should be assigned a meaning and given effect to so that no provision is redundant or otiose. In the said case, the question was whether the loss on account of pilferage could be rejected when there was a specific provision regarding pilferage goods under Section 13 and the claim was made under Section 23 of the Custom Act, 1962. Since there were two conflicting sections, the Hon'ble High Court held that when there is a provision which deals with a specific situation, the 21 Appeal No.E/60839 & 60838/2017 general provision in the later part of the statute even if encompassing the situation already dealt with would not be applicable on the account of pilferage. In the present case, the provision in Rule 5 of CCR is a specific provision dealing with the refund under CCR. As the said provision is not in conflict with any other provision, the ratio of the said case is therefore not applicable to the facts of the present case. As held in the case of Steel Strips (supra), the legislature in its wisdom has restricted the refund in cash to certain select categories and the right of unutilized Cenvat Credit is not a matter of vested right.
21. The appellants have also relied on the judgment of UOI vs. Suksha International & Nutan Gems & Anrs. (supra) wherein it was held that the interpretation unduly restricting the scope of a beneficial provision is to be avoided so that it may not take away with on hand what the policy gives with the other. In this case, the dispute was about certain incentives to Export Houses and there was dispute in the interpretation of clause 4 and 7 of para 185 of the Import-Export Policy, 1982-83. Hon'ble Apex Court observed that in their plain wording, there were certain constitutional difficulties in clauses 4 and 7 and hence there was need for harmonious construction. In the present case, I find that there is no ambiguity in the wording of the Rule 5 of CCR or in Section 11B nor is there any contradiction between the two. Intent of the legislature is clear from the plain wording of the Rule. Hence, the ratio of the said case is not applicable to the facts of the present case.
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22. The appellant have also relied upon the decision of JS (RA) in the case of British Airways (supra). Apart from the fact that the said decision is not in the context of Cenvat Credit Rules, the decision of JS (RA) are not a binding precedent and hence the same cannot be applied to the present case.
23. In view of foregoing discussion and reasoning, I find that there is no infirmity in the order of the Ld. Commissioner (Appeals) and the same is sustained.
24. In the result, the appeals are dismissed.
(Order pronounced in the court on 10.08.2018) (DEVENDER SINGH) MEMBER (TECHNICAL) mk