In a recent ruling, the Mumbai bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the taxpayer was eligible for a refund of CENVAT credit on inputs or input services used in the export of goods or services.
The issue to be decided was whether the present case involves the determination of the eligible amount of refund of CENVAT credit for inputs and/or input services used in the export of goods or services, as provided under Rule 5 of the CENVAT Credit Rules, 2004, and Notification No. 5/2006-C.E. (N.T) dated 14.03.2006, which was refundable to the assessee.
The assessee was engaged in the manufacture of Organic Chemicals falling under Chapter 32 of the Central Excise Tariff Act, 1985 and are availing the benefits of CENVAT credit on the inputs and input services. The applicant had preferred a refund claim dated 29.12.2009 by filing an application in the prescribed format for refund of unutilized input credit of Rs.13, 37,072/- being the CENVAT Credit involved in the export of goods during the period January to March, 2009.
The refund application was examined by the jurisdictional Assistant Commissioner being the original authority and in exercise of the powers vested with him under Section 11B of the Central Excise Act, 1944, he had sanctioned refund of Rs.4,22,558/- out of the total refund claim filed for Rs.13,37,072/- by passing an Order-in-Original dated 19.03.2010.
Mr. Sunil Agarwal, representing the assessee submitted that they had claimed a refund of Rs.13, 37,072/-. However, none of the lower authorities have examined the factual details along with documents to work out the actual credit of inputs involved in export of goods, which is refundable to them under Rule 5 of CENAT Credit Rules, 2004.
Further also highlighted that out of the total clearances of Rs.5, 64, 08,820/-, a small portion of goods worthRs.9, 19,120/- were alone cleared for domestic consumption and rest of the major portion of the goods were exported by the appellant. Hence, they are eligible for refund in terms of the calculation prescribed under Notification No. 5/2006-CE(N.T) dated 14.03.2006. In support of the claim, they submitted a copy of the refund application submitted to the original authority on 29.12.2009 along with the details of the export in various annexures along with few copies of tax invoices.
The bench found that the assessee was eligible for refund of Cenvat credit of inputs availed during the quarter January, 2009 to March, 2009 after adjusting/deducting for the Cenvat credit utilized, thereby arriving at the correct amount of Cenvat credit on inputs which could not be utilized for payment of tax or duty as Rs.3,44,804/- (Rs.23,32,780/- minus Rs.49,87,976/-).
Further, the amount of Cenvat credit of input services which could not be utilized and by restricting the same to the extent of ratio of export turnover to the total turnover as per the prescribed formula, the eligible Cenvat credit for refund was arrived at Rs.77,754/-. Thus, the total eligible amount of Cenvat credit refundable to the assessee was worked out as Rs.4, 22,558/-, out of the total refund claim filed for an amount of Rs.13, 37,072/-.
The single member bench of the tribunal comprising M.M. Parthiban ( Technical member) do not find any merits in the impugned order dated 21.08.2018, insofar as the adjudged demands were confirmed on the appellant by the Commissioner (Appeals), upholding the order of the original authority and by rejecting the appeal filed by the appellant. Accordingly, setting aside the impugned order, the appeal was allowed in favour of the assessee.
Further considered view that the adjudged demands confirmed on the appellants being ineligible refund of Cenvat credit and rejection of eligible refunds, in the impugned order dated 21.08.2018 was liable to be set aside.
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