Refund claim time-barred, deemed exports treated as physical exports for refund purposes.

The Tribunal upheld the rejection of a refund claim due to being time-barred under Section 11B of the Central Excise Act, 1944. However, it set aside the rejection of another refund claim, stating that deemed exports should be treated as physical exports for refund purposes under Rule 5 of the Cenvat Credit Rules, 2004. The appeals were disposed of accordingly, with one refund claim being denied and the other being allowed.

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Issues Involved:
1. Applicability of the time limit prescribed in Section 11B of the Central Excise Act, 1944 for refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004.
2. Whether the supply of goods between two 100% Export Oriented Units (EOUs), recognized as 'deemed export' under the Foreign Trade Policy (FTP), qualifies as 'physical export' for the purpose of refund under Rule 5 of the Cenvat Credit Rules, 2004.

Detailed Analysis:

1. Applicability of the Time Limit Prescribed in Section 11B of the Central Excise Act, 1944:

The appellant's refund application for the period from 01.07.2007 to 11.08.2007 was rejected on the grounds of being time-barred as per Section 11B of the Central Excise Act, 1944. The appellant argued that the refund claim was filed within one year from the end of the relevant quarter, in accordance with Notification No. 5/2006-Central Excise (N.T.) dated 14.03.2006. The appellant relied on the language used in the notification, specifically the word 'may', to justify filing the refund claim on a quarterly basis. Additionally, the appellant cited the Board Circular No. 112/6/2009-ST and judgments from the Karnataka High Court and Gujarat High Court to support their stance that Section 11B should not apply to refund claims under Rule 5 of the Cenvat Credit Rules.

Contrarily, the respondent argued that Notification No. 5/2006-C.E.(N.T) adopts the limitation period under Section 11B of the Act, requiring the refund claim to be filed within one year from the date of deemed export. The respondent supported their argument with a judgment from the Madras High Court in the case of GTN Engineering (I) Ltd.

Upon review, the Tribunal found that the term 'relevant date' is not defined in Rule 5 or the notification. The Tribunal referred to the Madras High Court's judgment in GTN Engineering, which held that the relevant date should be the date on which the goods were cleared for export. The Tribunal concluded that the appellant's claim was indeed time-barred under Section 11B, as the relevant date for filing the refund claim should be the date of export, and dismissed the appellant's argument based on the Karnataka High Court's judgment in mPortal India Wireless Solutions P. Ltd.

2. Whether 'Deemed Export' Qualifies as 'Physical Export' for Refund:

The appellant's refund claims for the periods October-December 2007 and January-March 2008 were denied on the grounds that Rule 5 of the Cenvat Credit Rules applies only to 'physical exports', not 'deemed exports' to other EOUs. The appellant contended that deemed exports should be treated at par with physical exports for refund purposes under Rule 5. The appellant cited judgments from the Gujarat High Court in the cases of Shilpa Copper Wire Industries and NBM Industries to support this argument.

The respondent maintained that physical export should not be equated with deemed export, referencing the Madras High Court's judgment in BAPL Industries Ltd.

The Tribunal found that the judgment of the Gujarat High Court in Shilpa Copper Wire Industries, which held that deemed exports should be treated as physical exports for refund purposes under Rule 5, was more applicable. The Tribunal noted that in cases of conflicting judgments, the decision of a division bench (as in Shilpa Copper Wire Industries) prevails over that of a single judge (as in BAPL Industries).

Conclusion:

The Tribunal upheld the rejection of the refund claim amounting to Rs. 3,31,274/- on the grounds of being time-barred under Section 11B of the Central Excise Act, 1944. However, the Tribunal set aside the rejection of the refund claim amounting to Rs. 4,92,036/- on the grounds that deemed exports should be treated as physical exports for the purpose of refund under Rule 5 of the Cenvat Credit Rules, 2004. The appeals were disposed of accordingly.

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