2014 (3) TMI 421 - AT - Central Excise

Tribunal grants appeal, emphasizes Rule 5 for excise duty payment, rejects Revenue's refund argument.

M/s SREE SVM TEXTILE MILLS Versus CCE, COIMBATORE

M/s SREE SVM TEXTILE MILLS Versus CCE, COIMBATORE - 2014 (301) E.L.T. 499 (Tri. - Chennai) Issues:Refund claims rejection based on lack of correlation with proof of export documents, denial of refund for goods not removed from appellant's factory, rejection of refund claims for goods cleared by merchant exporters, denial of refund for excise duty paid as a dealer, eligibility of dealer for refund under Rule 5 of Cenvat Credit Rules, 2002.Analysis:1. The appellant filed refund claims under Rule 5 of the Cenvat Credit Rules, 2002 for accumulated Cenvat credit on inputs used in exporting goods via different methods. Five show cause notices were issued, citing reasons like lack of proof of not availing draw-back claim, absence of export documents, failure to show credit non-utilization for DTA goods, and missing calculation formula for refund quantification.2. The Commissioner (Appeals) allowed refund for goods directly exported from appellant's factory but denied it for other export methods. The Tribunal overturned this decision, emphasizing that export goods need not be removed from the factory for refund eligibility under Rule 5, contrary to the Commissioner's stance, citing the case of CCE Vs. UIC Wires Ltd. The Tribunal's order set aside the previous decision.3. Subsequently, the adjudicating authority reprocessed the refund claims, sanctioning a partial amount and rejecting the rest, citing input calculation and credit utilization reasons. The Commissioner (A) rejected the appeal based on the appellant's dealer status for excise duty refund, not considering them as a manufacturer under Rule 5. The appellant challenged this decision before the Tribunal.4. The appellant argued that as per Notification No. 34/03-CE, dealers could opt for excise duty payment and Cenvat credit utilization, making them eligible for refunds under Rule 5. The Revenue contended that dealer status precludes refund eligibility, citing Essar Steel Ltd case. The Tribunal noted the inconsistency in rejecting refunds based on new grounds without prior notice and upheld the appellant's eligibility for refund under Rule 5 as a dealer of textile goods.5. The Tribunal ruled in favor of the appellant, allowing the appeal and granting consequential benefits, provided the Cenvat credit was not utilized for duty payment during the relevant period. The decision emphasized the applicability of Rule 5 to dealers opting for excise duty payment, aligning with the government's policy on tax-free exports and rejecting the Revenue's argument against refund eligibility for dealers.