Appellant's EOU Refund Appeals Rejected for Non-Compliance

The appeals filed by the appellant, a 100% Export Oriented Unit (EOU) seeking refund of accumulated Input Tax Credit on export of goods and services without payment of Integrated tax, were rejected. The rejection was due to the appellant's failure to comply with Circular No. 14/14/2017-GST, which outlines procedural requirements for deemed export supplies to EOUs under Section 147 of the CGST Act, 2017. The appellate authority upheld the decision, emphasizing the mandatory nature of compliance with the Circular's requirements for EOUs like the appellant, leading to the denial of refunds.

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Issues:
- Appeals filed against rejection of refund claims for accumulated Input Tax Credit (ITC) on export of goods and services without payment of Integrated tax.
- Applicability of Circular No. 14/2017 and Circular No. 24/24/2017-GST in the case of an Export Oriented Unit (EOU).
- Compliance with procedural requirements for deemed export supplies under Section 147 of the CGST Act, 2017.
- Interpretation of Rule 89 of the CGST Rules, 2017 regarding refund claims for deemed export supplies.

Analysis:
1. Rejection of Refund Claims: The appellant, a 100% Export Oriented Unit (EOU) engaged in exporting jewelry, filed refund applications for accumulated ITC on export of goods and services without payment of Integrated tax. The adjudicating authority rejected the refund claims citing non-compliance with Circular No. 24/242017-GST dated 21.12.2017, which outlines procedural requirements for deemed export supplies under Section 147 of the CGST Act, 2017.

2. Grounds of Appeal: The appellant contested the rejection of refund claims on the basis that Circular No. 14/2017, which formed the basis of rejection, was not applicable to them as an EOU. They argued that being an EOU, they procured goods from the Domestic Tariff Area (DTA) after paying applicable taxes at normal rates, and the Circular's conditions were not relevant to their situation.

3. Compliance with Circular Requirements: The appellate authority examined the case records and submissions. It noted that the appellant's failure to comply with the Circular's requirements, such as giving prior intimation in a prescribed proforma and obtaining an undertaking from the supplier of deemed export supplies, led to the rejection of refund claims. The Circular mandates specific procedures for deemed export supplies to EOUs, and non-compliance resulted in the denial of refunds.

4. Legal Position and Decision: Rule 89 of the CGST Rules, 2017 allows either the recipient or supplier of deemed export supplies to claim refunds. Circular No. 14/14/2017-GST, dated 06.11.2017, sets out procedures and safeguards for supplies to EOUs. The appellate authority upheld the adjudicating authority's decision, emphasizing that the appellant's failure to adhere to the Circular's requirements meant they were not entitled to refunds. Compliance with Circular No. 14/14/2017-GST was deemed mandatory for EOUs like the appellant.

5. Clarification and Conclusion: Further clarification in Circular No.125/44/2019-GST reiterated the need for compliance with Circular No. 14/14/2017-GST for procurement of supplies from DTA by EOUs. The legal position required the appellant to follow the prescribed procedures strictly, and their non-compliance led to the rejection of refund claims. Consequently, the appeals filed by the appellant were rejected, and the impugned orders were upheld based on the failure to meet the procedural requirements outlined in the Circulars.

By analyzing the issues and the detailed judgment, it is evident that the decision was based on the appellant's non-compliance with the Circular's procedural requirements for deemed export supplies, specifically applicable to EOUs like the appellant.

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