By TIOL News Service
MUMBAI, JULY 23, 2011: THE facts of the case are that the appellants are engaged in the manufacture of metal containers. These metal containers were cleared by the appellants without payment of duty to 100% EOU under CT-3 certificate. The 100% EOU used the said metal containers as a packing material for fruit pulp and the same was exported.
Thereafter the appellants filed refund claim of the unutilized CENVAT credit lying accumulated in the CENVAT credit account as on 31.03.2008. The appellants asubmitted that their clearances to 100% EOU is deemed exports and since their duty paid clearances have gone down, CENVAT credit has accumulated and they are unable to utilise the same.
It is the allegation of the department that the clearances to 100% EOU cannot be treated as export under bond or LUT and hence it cannot be said that accumulation of the CENVAT credit is as per Rule 5 of the CENVAT Credit Rules, 2004.
Therefore, a show cause notice was issued and the refund claim was denied on the following grounds:-
(a) the supplies to 100% EOU cannot be deemed export under bond and or LUT and
(b) the claims of refund were submitted for three financial years at once instead of filing the refund claims on quarterly basis as per notification 5/06-CE dated 14.3.2006.
Aggrieved from the said order which was upheld by the Commissioner(Appeals), the appellant is before the CESTAT.
The appellant placed reliance on the decision in Commissioner of Central Excise vs. Shilpa Copper Wire Industries (2008-TIOL-2789-CESTAT-Ahm) wherein on similar facts the refund claim was allowed of unutilized credit accumulated on account of clearance to 100 % EOU by treating such clearances as deemed exports. It is further submitted that as per Notification 5/06 CE (NT) dated 14.3.2006 the claim of refund is to be submitted not more than once for any quarter in a calendar year and, therefore, it did not mean that an assessee has to necessarily file the refund claim on quarterly basis only.
The Revenue representative submitted the following -
++ Nowhere in the Central Excise Act or the Customs Act the term “deemed export” has been defined.
++ Clearance made to 100% EOU cannot be termed as “exports” in view of the decision in CCE, Thane I vs. Tiger Steel (2010-TIOL-1256-CESTAT-Mum)
The Bench after considering the submissions observed -
“8. To deal with the first issue, we have gone through the Notification 5/2006 dated 14.3.2006 wherein it is provided that the refund claim can be submitted not more than once in any quarter in a calendar year. From the perusal of the provisions, we find that the intent of the legislature was that the assessee should not file refund claim on day to day basis or weekly or invoice-wise. To avoid multiplicity of the refund claim this provision was made, therefore, it is suggested that refund claim can be filed on quarterly basis in a calendar year i.e not more than four times in a calendar year. It does not mean that the assessee has to file refund claim quarterly. It is not the intent of the legislature. In our opinion, if the assessee files a refund claim once in a year that will also avoid the multiplicity. Therefore, we do not find any merit in the denial of the rebate claim on this ground.
9. Now we will deal with the second issue wherein the refund claim has been denied on the ground that the clearance to 100% EOU does not qualify the provisions of Rule 5 of the CENVAT Credit Rules, 2004 as these are not exports. As contended by the DR, that in the case of Tiger Steel Engineering clearance made to SEZ were not held exports. The same treatment is to be given to this case. We are not in agreement with the argument of the DR. In fact in that case the issue before the Tribunal was whether the clearance made to SEZ are export or not. But in the case in hand, the facts are that the appellants have cleared the goods to 100% EOU which has further exported the goods physically. The intent of the legislature is to promote the export of goods and not to export the taxes. In this case, the appellant has brought on record the evidences showing that the goods supplied by them to 100% EOU have finally been exported physically. Therefore, they are entitled to rebate claim. We have seen the impugned orders, both the lower authorities have not verified the documents whether the goods supplied by the appellants to 100% EOU have finally been exported physically or not. Therefore, matter needs examination at the end of the adjudicating authority….”
Holding so, the matter was remanded to the adjudicating authority to verify from the evidences produced by the appellants whether the goods supplied by the appellants to 100% EOU were exported physically by EOU or not. It was also made clear that if it is established that the goods supplied by the appellants have been physically exported by the 100% EOU, the adjudicating authority was to allow the refund claim of the appellants.
(See 2011-TIOL-919-CESTAT-MUM in 'Excise' )
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