Custom, Excise & Service Tax Tribunal
M/S. Everest Industries Ltd vs C.C.E, Meerut - I on 5 April, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Court No. III
ST/2687/2012-CU[DB]
(Arising out of Order-in-Appeal No.105CE/MRT-I/2012, dated 25.04.2012 passed by the Commissioner, Central Excise, Meerut-I)
Date of Hearing: 05.04.2013
Honble Shri, Justice G. Raghuram, President
Honble Shri. Sahab Singh, Technical Member
1. Whether Press Reporters may be allowed to see : No
The order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it would be released under Rule 27 of : Yes
The CESTAT (Procedure) rules, 1982 for
Publication in any authoritative report or not?
3. Whether their lordships wish to see the fair : Seen
copy of the order?
4. Whether order is to be circulated to the : Yes
Department Authorities?
M/s. Everest Industries Ltd. Appellant
Vs
C.C.E, Meerut - I Respondent
Appearance:
Appeared for the Appellant: Ms. Anchal, CA
Shri, Monoj Mishra, Adv.,
Appeared for the Respondent: Shri, Amresh Jain, D.R.
Coram: Honble Shri, Justice G. Raghuram, President
Honble Shri, Sahab Singh, Technical Member
FINAL ORDER No. 56032/2013
Per Sahab Singh:
This appeal is filed by M/s Everest Industries Ltd. (hereinafter referred to as appellant) against order in appeal no. 105-CE/MRT-I/2012 dated 25.04.2012.
2. Brief facts of the case are that appellant had filed a refund claim of Cenvat Credit of Rs. 12,87,520/- on 05.05.2010 under Rule 5 of the Cenvat Credit Rules 2004 in respect of unutilized Cenvat Credit of duty/service tax paid on input/input service used in export of final product during period 01.10.2009 to 31.03.2010. Under Rule 6(1) of the Cenvat Credit Rule 2004, Cenvat Credit is not admissible on such quantity of input/input service which is used in the manufacture of exempted goods or services except in the circumstances mentioned in sub-rule(2). Since final products manufactured by the appellant are fully exempt under notification 50/2003-CE dated 10.06.2003 appellant is neither eligible to avail the Cenvat Credit nor can claim any refund of said credit under Rule 5 of the Cenvat Credit Rules. Accordingly a Show Cause Notice was issued to the appellant proposing the rejection of refund claim. Said Show Cause Notice was adjudicated by the Deputy Commissioner vide order in original no. R-8/2011 dated 14.01.2011. Appellant preferred an appeal before Commissioner (Appeal) who vide impugned order rejected their appeal. Hence this appeal.
3. Ld. Counsel appearing for the appellant submits that in this case goods have been supplied to SEZ without payment of duty. Under Rule 6(6) (i) of the Cenvat Credit Rules once goods are supplied to SEZ, provision of sub-rule (1), (2), (3), (4) of Rule 6 become inapplicable. Since supplies to SEZ are export, the appellant is entitled to refund of Cenvat Credit in report of duty/service tax. She further submits that even if it is assumed that final products are exempted under Notification 50/2003, refund of Cenvat Credit can be availed by them under Rule 18 of the Central Excise Rule.
4. Ld. DR appearing for Revenue submits that goods manufactured by the appellant are exempted for Central Excise duty. Once goods are exempted, they are not entitled to avail the Cenvat Credit under Rule 6(1) of the Cenvat Credit Rules. Once they are not eligible to avail the credit, the question of the refund under Rule 5 does not arise.
5. After hearing both sides, we find that issue involved in this appeal is eligibility of refund claimed by the appellant under Rule 5 of the Cenvat Credit Rule in respect of inputs/input services used in final products supplied to SEZ, Rule 5 of the Cenvat Credit Rules reads as under:
5. Refund of CENVAT credit Where any input of 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 CENVAT 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 of 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: Ongoing though Rule 5, we note that the Rule provides for refund of Cenvat Credit taken on input/input service used in manufacture of final product which is cleared for export. In this case goods are supplied to SEZ units by the appellant. Question before us is whether supplies made to SEZ can be treated as export. This issue came for to consideration before the Tribunal in case of Commissioner of Central Excise Thane I Vs Tiger Steel Engineering (India) Pvt. Ltd. reported in 2010 TIOL 1983 CESTAT Mumbai. In para 11 of the decition Tribunal has held as under:
11. In the present case, the respondent claimed refund of accumulated CENVAT Credit Rule 5 of the CENVAT Credit Rules, 2004. For this benefit, they had to satisfy two conditions viz. (i) the Cenvated inputs should have been used in relation to the manufacture of the finished goods supplied to SEZ unit by way of export under Bond/Letter of Undertaking and (ii) the CENVAT Credit taken on the inputs ws practically not capable of being utilized for payment of duty on any final product. The finished goods, in this case, were admittedly supplied to SEZ units under Letter of Undertaking. However, the question arises as to whether such supply of goods to SEZ units was an export. At no time was the term export defined under the Central Excise Act or any Rules framed there under. The definition of export given under the Customs Act has been traditionally adopted for purposes for the Central Excise Act and the Rules thereunder. Therefore, in the absence of a definition of export under the Central Excise Act, the Central Excise Rules or the CENVAT Credit Rules, 2004, we hold that for purposes of the CENVAT Credit Rules, 2004, one should look for its definition given under the Customs Act. The fictionalized definition of export under Section 2 (m) (ii) of the SEZ Act cannot be looked for as it purports only to make the SEZ unit an exporter. In other words, the term export used in Rule 5 of the CENVAT Credit Rules, 2004 stands for export, which is physical export out of the country, envisaged under the Customs Act. We take this view because, as we have already indicated, anybody other than SEZ unit cannot be allowed to claim any benefit under the SEZ Act/Rules. Viewed from this angle, the respondent cannot be held to be entitled to refund of accumulated CENVET Credit on the inputs used in our in relation to the manufacture of the Pre-fabricated buildings supplied by them to the SEZ units.
Following the said decision, we are of the view the supplies made to SEZ can not be treated as export for the purpose of Rule5 of the Cenvat Credit Rules and accordingly appellant is not entitled to refund of Cenvat Credit in respect of inputs/inputs services used in the manufacture of final products supplied to SEZ unit.
5. Appeal is rejected.
(JUSTICE G. RAGHURAM) President (Sahab Singh) Member Technical Neha 1