2016 (2) TMI 949 - AT - Central Excise

Tribunal Orders Refund for Duty Paid in EOU to EPCG, Revenue Appeal Allowed

The Tribunal ruled in favor of the appellant-assessee, directing the Adjudicating Authority to grant a refund with interest within 45 days for duty paid ... Cenvat credit utilization at debonding - Rule 11(3) of Cenvat Credit Rules, 2004 - Refund of duty paid from Cenvat - Remand for computation under Notification No. 5/2006-C.E. - Limitation for refund claims (12 months) - Interest on delayed refundCenvat credit utilization at debonding - Rule 11(3) of Cenvat Credit Rules, 2004 - Refund of duty paid from Cenvat - Limitation for refund claims (12 months) - Entitlement of the assessee to refund of amount paid by debiting Cenvat credit at the time of debonding and subsequently paid again in cash, and correctness of the claimed refund being within time. - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) had upheld the finding that the assessee was entitled to utilize Cenvat credit to discharge duty liability at the time of debonding from 100% EOU to EPCG. On that footing, the amount of Rs. 28,97,553/- which was debited to Cenvat at debonding and later paid again in cash qualifies for refund. The Tribunal further accepted the Commissioner (Appeals)'s view on the relevant date for limitation and held that the refund claim was filed within 12 months from the date of payment (24-12-2007). Applying these conclusions, the Tribunal directed grant of refund with interest and implementation by the Adjudicating Authority within 45 days of receipt of the order. [Paras 8]The assessee is entitled to refund of the amount paid by utilization of Cenvat (and subsequently deposited in cash) and the refund claim is time barred.Remand for computation under Notification No. 5/2006-C.E. - Refund of duty paid from Cenvat - Validity of the Commissioner (Appeals)'s remand to determine exact refund amount in terms of Paragraph 5 of Notification No. 5/2006-C.E. - HELD THAT: - The Tribunal noted that Revenue did not dispute the Commissioner (Appeals)'s core finding that Cenvat credit could be used to pay duty at debonding. Since that primary entitlement was affirmed, the Tribunal found no need to consider or remand the matter for computation under Notification No. 5/2006-C.E. and accordingly set aside the remand contained in Paragraph 5.5 of the order in appeal dated 26 2 2010. The consequence is that the adjudicatory authority should proceed to grant refund without further remand for that computation. [Paras 8]The remand for verification/calculation under Paragraph 5 of Notification No. 5/2006-C.E. is set aside.Final Conclusion: The appeal filed by the assessee is allowed: the amount paid by debiting Cenvat at the time of debonding (and thereafter deposited in cash) is refundable and the refund claim was within the 12 month period; the earlier remand to compute refund under Paragraph 5 of Notification No. 5/2006 C.E. is set aside and the Adjudicating Authority is directed to grant the refund with interest within 45 days. Issues:- Whether the appellant-assessee rightly paid duty at the time of debonding from EOU to EPCG Scheme and is entitled to a refundRs.- Whether the Revenue's appeal against the Commissioner's findings on duty payment is justifiedRs.Analysis:Issue 1:The appellant, previously a 100% EOU manufacturing cotton yarn, sought to shift to the EPCG scheme. Upon debonding, the appellant calculated duty liability on imported and indigenous capital goods and raw materials. A portion of the duty was paid via Cenvat credit, and the remainder in cash. After the Revenue's insistence, the appellant deposited the same amount again in cash and applied for a refund. The appellant's claim was contested on grounds of lapsing Cenvat credit, time-barred refund, and availability of Cenvat credit on certain input services. The Commissioner (Appeals) held that the appellant rightly used Cenvat credit for duty payment during debonding. The Commissioner remanded the case for determining the exact refund amount as per Notification No. 5/2006. The Tribunal found that as the Revenue did not dispute the appellant's entitlement to use Cenvat credit, there was no need to consider the refund under Notification 5/2006. The Tribunal ruled in favor of the appellant, directing the Adjudicating Authority to grant the refund with interest within 45 days.Issue 2:The Revenue's appeal questioned the remand order of the Commissioner (Appeals) regarding the calculation of the refund amount. However, since the Revenue did not contest the appellant's right to utilize Cenvat credit for duty payment, the Tribunal set aside the remand order and allowed the appeal of the appellant-assessee. The Revenue's appeal was allowed for statistical purposes only.In conclusion, the Tribunal allowed the appellant's appeal, granting the refund of the duty amount paid during debonding, as the appellant was entitled to use Cenvat credit for payment. The Revenue's appeal was allowed only for statistical purposes, as they did not dispute the appellant's entitlement to utilize Cenvat credit.