2015 (11) TMI 1338 - AT - Central Excise

Tribunal upholds refund claim despite procedural lapse, deeming clause requirement as directory, not mandatory.

Commissioner of Central Excise, Pune III Versus Bora Agro Foods

Commissioner of Central Excise, Pune III Versus Bora Agro Foods - TMI Issues:Refund claim rejection under Rule 5 of CENVAT Credit Rules, 2004 based on non-compliance with clause 2(h) of Notification 27/12-CE(NT) dated 18.06.2012.Analysis:The case involved a dispute where the respondent, a 100% EOU availing Cenvat credit facilities, filed a refund claim for the period July 2012 to September 2012, which was rejected due to non-satisfaction of clause 2(h) of the notification. The Commissioner (Appeals) allowed the refund claim partially, leading to an appeal by the Revenue on the grounds of mandatory conditions not being met as per the Notification. The main contention was that the claim should be rejected based on the Supreme Court's decision in a similar case. The respondent argued that all relevant export documents were submitted, the refund claim was timely, and the debiting of the refund claim amount in the CENVAT Account was done on the day of filing the claim. The respondent had also fulfilled all conditions and limitations of the Notification except for the alleged violation of clause 2(h). Despite a procedural lapse of not reflecting the debit in the ER-2 Return for July 2013, the Tribunal found that the requirement of clause 2(h) was directory and not mandatory. The Tribunal emphasized that the debiting of the amount at the time of filing the claim was a procedural requirement to safeguard revenue interests. The Tribunal referred to a Supreme Court decision on substantial compliance, stating that non-fulfillment of directory requirements could be condoned if mandatory requirements were met. The Tribunal concluded that the rejection of the refund claim based on the non-debiting issue was incorrect, and the refund was admissible as all mandatory conditions were fulfilled.In the appeal, the Tribunal noted that none of the findings of the Commissioner (Appeals) had been disputed except for the argument that the condition under clause 2(h) was mandatory. The Tribunal found that the debiting of the amount in the CENVAT credit account on the date of filing the refund claim satisfied the condition, even though the details were not reflected in the ER-2 or the application. The Tribunal concluded that all necessary information was provided to the Revenue before the decision, ruling out any possibility of manipulation. Therefore, the Tribunal upheld the order passed by the Commissioner (Appeals) and dismissed the appeal filed by the Revenue.