The Commissisoner of Central Excise vs GTN Engineering (I) Ltd.

D. Murugesan, J.—These six appeals are directed against the common order of the Customs, Excise & Service Tax Appellate Tribunal,

Chennai dated 13.08.2010. By that order, the Tribunal held that in terms of Rule 5 of the CENVAT Credit Rules, 2004, r/w Notification No.

5/2006 -CE(NT) dated 14.3.2006, the question of limitation to claim refund of CENVAT credit cannot be pressed into service. While setting

aside the order of the Commissioner of Central Excise (Appeals), the Tribunal remanded the matters for fresh consideration after giving

opportunity to the Assessee/respondent to place relevant materials.

As to the question whether the claim for refund of the CENVAT credit facilities should be made before the expiry of the period of one year

from the relevant date is of much importance, as we are informed that there is no decision of this Court on the issue, we are inclined to consider the

relevant provisions in detail.

While admitting the appeal, the following substantial questions of law were framed:

Whether on the facts and circumstances of the case, the Tribunal is right in law in setting aside the order of Commissioner (Appeals),

Coimbatore and remanding the matter for fresh consideration notwithstanding the fact that the Appellant was given ample opportunity to

corroborate their claim of CENVAT Credit attributable to inputs contained in the export products.

Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that Section 11(B) is not applicable to the instant case

in so far as credit accumulated in CENVAT credit account is not duty paid by the exporter and it becomes duty only when the credit is debited

towards duty payable and therefore Rule 5 of CENVAT credit rules will not be applicable.

Whether on the facts and circumstances of the case, the Tribunal is right in holding that Section 11(B) refers to refund of duty paid and that the

Appellants are not claiming refund and that they are claiming only refund of CENVAT credit already taken by them, which could not be utilized as

they have accumulated due to exports.

Whether on the facts and circumstances of the case, the Tribunal is right in holding that the claim for refund of CENVAT credit as per

notification No. 5/2006 should be made on quarter basis is only administrative convenience and that this does not specify any time limit for claiming

fund.

Whether the Tribunal was correct in holding that time-limit shall not apply when Notification No. 5/2006 -CE(NT) dt. 14.03.2006 clearly

stipulates the period within which refund application has to be filed under Rule 5 of CENVAT Credit Rules, 2004, mandating the claimant of

refund of inputs used in the manufature of final product which is cleared for export under bond or letter of undertaking, to file the claim before the

expriy of the period specified in Section 11B and

Whether the Tribunal was correct in relying only on a case, which dealt with erstwhile Central Excise Rules, 1944 that has no relevance to the

present issue and also which has been appealed against in Supreme Court, without considering/refuting the findings of the Adjudicating and

Appellate Authorities.

The Respondent M/S. GTN Engineering (I) Ltd., are the 4 holders of Central Excise Registration and are the manufacturers ofvalves and parts

of valves. They made six individual refund claimsinvoking Rule 5 of CENVAT Credit Rules, 2004 for refund of CENVATcredit of duty paid on

inputs and capital goods, which were used inthe manufacture of valves exported. For a better appreciation ofthe factual details relating to the claim,

we may refer the following:

A. No. Order Sl. No. & Period for whichAmount of refund Date of receipt

Date refund claimed claimed under rule of the claim

relates. 5 of CCR 2004.

49/2009/CE 78/2009 dt. April-06 to June Rs. 2,18,866/ 25/01/2008

31.03.2009 06

50/2009/CE 79/2009 dt. Julyl-06 to Sept Rs. 2,82,366/ 25/01/2008

31.03.2009 06

51/2009/CE 80/2009 dt. Oct-06 to Dec Rs. 7,00,633/ 25/01/2008

31.03.2009 06

52/2009/CE 84/2009 dt. Jan-07 to MarchRs. 5,60,842/ 04/01/2008

31.03.2009 07

53/2009/CE 85/2009 dt. Apr-07 to June Rs. 5,08,510/ 27/12/2007

31.03.2009 07

54/2009/CE 86/2009 dt. July-07 to Sept. Rs. 2,85,411/ 27/12/2007

31.03.2009 07

By six individual orders in original dated 31.3.2009, the original authority accepted the claim of the revenue in respect of the claim Nos.

84/2009, 85/2009 and 86/2009 on the ground that the credit inputs received after the export clearance are not eligible for refund and accordingly

rejected the same. Insofar as the other three claims namely, Claim Nos. 78/2009, 79/2009 and 80/2009, the Assistant Commissioner of Central

Excise, Customs & Service Tax, rejected the claims on the ground that they are time barred.

These orders were taken on appeal before the Commissioner (Appeals), Coimbatore, who, by a common order dated 13.10.2009, held that all

the six claims were time barred and on that ground, all the six appeals were rejected as devoid of merits and the orders of the lower authority were

sustained. Being aggrieved by the above order, the assesse preferred appeals before the Customs Excise and Service Tax Appellate Tribunal,

which set aside the orders of the authorities below and remanded the matter for fresh consideration in the light of the directions made therein.

Against the order of the Appellate Authority, these appeals are filed by the Commissioner of Central Excise, Coimbatore.

We have heard the respective counsel for the Appellants/Revenue and Respondents, on the questions of law raised.

It is the contention of the Learned Counsel for the Appellant/Revenue that though the provisions of Section 11B of the Central Excise Act,

1944, entitles any person to claim refund of any duty of excise and interest, if any, paid on such duty, by itself is not applicable to the claim of

refund of CENVAT credit. To get over the same, Rule 5 of CENVAT Credit Rules, 2004, provides for such refund of CENVAT credit. By that

rule, the Central Government is empowered to issue Notification for making claim for such refund. Accordingly, in terms of the said rule, relevant

notification was issued and Clause 6 of the Appendix contemplates that the claim could be entertained only on compliance of the period of

limitation prescribed u/s 11B of the Central Excise Act. On the ground that in all these cases, claims have been made beyond the period of

limitation, the Commissioner (Appeals) has rightly rejected all the six claims of the Respondent. The said order has been interfered by the

CESTAT by holding that as per Rule 5, no period of limitation could be prescribed in the absence of the notification by the Central Government as

to the relevant date. This finding of the Tribunal is contrary to the provisions of the Act and Rules and the notification made thereunder. The

Learned Counsel would further submit that in any case, in the absence of sufficient materials produced before the authorities, the rejection of the

claim for refund is well justified and the Tribunal ought not to have remanded the matter for that reason.

On the other hand, the Learned Counsel for the Respondent would submit that though the provisions of Section 11B is not strictly made

applicable to the refund of CENVAT credit, as it applies only for the claim of duties and interests if any, paid on such duty, in the wake of the

provisions of sub-rule 5 and the notification as such, claims could be made. Nevertheless, in the absence of any notification in regard to the relevant

date as defined in Section 11B(5)(B) of the Act, the rejection of the claim for refund on the ground of period of limitation is bad.

The Learned Counsel would draw our attention to the above provision defining the relevant date and contended that none of the clauses

contained therein would apply for the claim for refund on CENVAT credit. In the absence of the same, the finding of the CESTAT requires no

interference. As far as the other findings for remittal viz., the Respondent had to produce materials, is concerned, he would submit that the

Respondent requested the authorities to peruse the materials, because it were voluminous and there was a default on the part of the officers in

random verification of the said documents.

We have carefully considered the above said submissions. The relevant portion in Section 11B of the Central Excise Act, 1944, reads as

under:

11B. Claim for refund of [duty and interest, if any, paid on such duty]-(1) Any person claiming refund of any [duty of excise and interest, if any,

paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the [Assistant Commissioner of

Central Excise or Deputy Commissioner of Central Excise] before the expiry of [one year] [from the relevant date] [in such form and manner] as

may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in

Section 12A) as the applicant may furnish to establish that the amount of [duty of excise and interest, if any, paid on such duty] in relation to which

such refund is claimed was collected from, or paid by, him and the incidence of such [duty or interest, if any, paid on such duty] had not been

passed on by him to any other person.

By that provision, a claim for refund is made available in case of refund of duty and interest, if any paid on such duty and as far as that

provision is concerned, there is no dispute that it is applicable only in case of duty paid and not on the CENVAT credit facilities. As already

pointed out, to tide over the situation and also to make eligible for the manufacturer of the final products which is 100% export oriented, Rule 5 of

the CENVAT Credit Rules, 2004, entitles for making claim for refund of CENVAT credit and the relevant portion of the said rule reads as under:

RULE 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, 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) dutyor 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 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.

In terms of the said rule, the Central Government should notify as to the safeguards, conditions and limitations. Accordingly, Notification No.

5/2006 -CE(N.T.) dated 14.03.2006 has issued. Clause 6 appendix to the notification reads as under:

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).

The said notification prescribes a period of one year, as provided u/s 11B of the Central Excise Act, for the purpose of making application in

Form-A along with prescribed enclosures and also the relevant extracts of the records maintained under the Central Excise Rules, 2002,

CENVAT Credit Rules 2004 or Service Tax Rules, 1994 in original. That application should be filed before the Deputy Commissioner of Central

Excise or the Assistant Commissioner of Central Excise, as the case may be. For the purpose of finding out as to the relevant date for the purpose

of making claim for refund of CENVAT credit, Rule 5 should be made applicable. It is the contention of the Learned Counsel for the Assessee

that the provision defining relevant date does not cover the claim for refund of CENVAT credit. We may point out that when a statute empowered

for such claim, the said provision must be read to find out as to the relevant date. Rule 5 specifies that ""where any input or input service is used in

the manufactures 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.

A reading of the above rule, though there is no specific relevant date is prescribed in the notification, the relevant date must be the date on

which the final products are cleared for export. If any other conclusion is arrived, it will result in disentitling any person to make a claim of refund of

CENVAT Credit. Admittedly, the Respondent has made a claim only invoking Rule 5 of the CENVAT Credit Rules 2004. In that view of the

matter, there cannot be any difficulty for us to hold that the relevant date should be the date on which the export of the goods was made and for

such goods, refund of CENVAT credit is claimed.

The Learned Counsel for the Respondent would rely upon a judgment of the Gujarat High Court reported in 2008 (232) E.L.T.413 (Guj.)

Commissioner of Central Excise and Customs, Surat-I v. Swagat Synthetics. That was a case relating to Sub-rule (13) of Rule 57F of Central

Excise Rules, 1944, which reads as under:

(13) Where any inputs are used in the final products which are cleared for export under bond or used in the intermediate products cleared for

export in according with Sub-rule (4), the credit of specified duty in respect of the inputs so used shall be allowed to be utilised by the

manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where

for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and

limitations as may be specified by the Central Government by notification in the Official Gazette.

The said rule does not prescribe any time limit. In the absence of such prescription as to the limitation, the Gujarat High Court has held that the

claim of refund could not be rejected on the ground of limitation.

The Learned Counsel would also rely upon a judgment of Madhya Pradesh High Court at Indore reported in 2009 (236) E.L.T. 248 (M.P.)

STI India Ltd. v. Commissioner of Customs and Central Excise, Indore]. In that case, though the Court has held that Clause 6 of Appendix read

with Section 11B of Central Excise Act, 1944, cannot be made applicable insofar as the period of limitation is concerned when a claim for

CENVAT credit is made, a reading of the said provision shows that there is no reference to Rule 5. With great respect, we are not in agreement

with the said judgment as the judgment was rendered based on the rules and the notification which are procedural in nature. As we have found that

but for the provision of Rule 5 r/w notification, the Respondent could not have filed the application for refund, he has to satisfy the limitation clause

as provided u/s 11B of the Act.

In view of the above, the order of CESTAT holding that the limitation is not applicable to the facts in question to the case has to be set aside.

Accordingly the same is set aside.

As far as the remand is concerned, in view of our findings, the matter has to be remitted back, as directed by the CESTAT for the simple

reason that the Respondent should be given an opportunity to produce the materials in support of its claim. This remittal is applicable only to

Refund Order in Sl. No. 84/2009 of the Original Authority corresponding to Appeal No. 125/2009 of Commissioner of Appeals (C.M.A. No.

2185/2011), likewise Refund Order Sl. No. 85/2009 corresponding to Appeal No. 126 of 2009 (C.M.A. No. 2186/2011) and Refund Order Sl.

No. 86/2009 of the Original Authority corresponding to Appeal No. 127/2009 of the Commissioner of Appeals (C.M.A. No. 2187/2011).

Insofar as the other three appeals arising out of orders of the Commissioner of Appeal in Appeal Nos. 122/2009, 123/2009 and 124/2009

(C.M.A. Nos. 2182/2011, 2183/2011 and 2184/2011 of this Court) are concerned, in view of our findings, the Respondent cannot have the

benefit of remedy as the claim is time barred. Accordingly, C.M.A. Nos. 2182, 2183 and 2184 are liable to be allowed. The questions of law

raised in these appeals are answered accordingly.

In the result, C.M.A. Nos. 2182, 2183 and 2184 of 2011 are allowed setting aside the Final Order Nos. 897, 898 and 899 of 2010 of

Customs, Excise and Service Tax Appellate Tribunal and C.M.A. Nos. 2185, 2186 and 2187 of 2011 are dismissed, confirming the order of the

Customs, Excise and Service Tax Appellate Tribunal with respect to Final Order Nos. 900, 901 and 902 of 2010. No costs.