Rule 5 CENVAT refund unavailable for mistaken import payment, but unallowed credit may be reclaimed under the notification.

Refund under Rule 5 of the Cenvat Credit Rules, 2004 was unavailable for an amount mistakenly paid on import of hardware material, because that provision applies to refund of CENVAT credit linked to exported goods or services and no taxable service was involved. The claim also could not be sustained under section 11B of the Central Excise Act, 1944, as that route was not pursued. Rejection of the refund claim was therefore upheld. However, Notification No. 27/2012-CE (N.T.) permits the claimant to take back credit of the amount not sanctioned when the refund allowed is less than the amount claimed.

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Issues: Whether refund under Rule 5 of the Cenvat Credit Rules, 2004 was admissible in respect of an amount paid mistakenly on import of hardware material, and whether rejection of the claim was justified.

Analysis: The refund claim had been made under Rule 5, which governs refund of CENVAT credit in the context of exported goods or services. Since the amount in question related to payment made on import of hardware material and no taxable service was involved, the claim for refund of that amount did not arise under Rule 5. The claim also could not be sustained on the footing of Section 11B of the Central Excise Act, 1944, as the appellant had not pursued that route. At the same time, Notification No. 27/2012-CE (N.T.) dated 18.6.2012 contains a specific safeguard permitting the claimant to take back the credit of the difference where the sanctioned refund is less than the amount claimed.

Conclusion: The rejection of the refund claim was upheld and no interference was called for. The appellant was, however, entitled to take back the credit of the amount not sanctioned in terms of the notification.

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