2017 (5) TMI 503 - AT - Central Excise

Appellant granted refund for unutilized credit on input services for export under Cenvat Credit Rules

The Tribunal allowed the appellant's refund claim of Rs. 5,99,586/- under Rule 5 of the Cenvat Credit Rules, 2004 for unutilized credit on input services ... Cenvat credit refund on input services used in export - interpretation and application of Rule 5 of Cenvat Credit Rules, 2004 - substantive right under a rule cannot be denied for absence of prescribed procedural notification - precedential effect of Tribunal decisionsCenvat credit refund on input services used in export - interpretation and application of Rule 5 of Cenvat Credit Rules, 2004 - substantive right under a rule cannot be denied for absence of prescribed procedural notification - Refund of unutilized Cenvat credit of service tax on input services used in manufacture of goods cleared for export during January to March, 2006, is admissible despite absence of a prior notification prescribing refund procedure. - HELD THAT: - The Tribunal examined Rule 5 of the Cenvat Credit Rules, 2004, which on its plain wording permits refund of input or input service credit where such credit cannot be adjusted. Although the notification prescribing safeguards and limitations (providing a procedural mechanism) was issued w.e.f. 14.03.2006, the substantive entitlement to refund existed under Rule 5 from its operation. The Tribunal has applied its earlier decisions holding that lack of a contemporaneous notification does not defeat the rule-based right to refund, and followed those precedents. In view of that legal position, the departmental rejection of the refund claim for the period prior to 14.03.2006 on the sole ground of absence of prescribed procedure was unsustainable. [Paras 6, 7, 8]The impugned order rejecting the refund claim is set aside and the appellant's appeal is allowed.Final Conclusion: The Tribunal allowed the appellant's refund claim for unutilized Cenvat credit of service tax for the period January to March, 2006, holding that Rule 5(2004) grants a substantive refund entitlement which cannot be denied merely because the procedural notification was issued later; the Commissioner (Appeals) order is set aside. Issues:Refund claim under Rule 5 of Cenvat Credit Rules, 2004 for unutilized credit on input services used in manufacturing final products cleared for export.Analysis:The appellant filed a refund claim of Rs. 5,99,586/- under Rule 5 of the Cenvat Credit Rules, 2004 for unutilized credit on input services used in manufacturing final products cleared for export. The department rejected the claim stating that the refund of service tax credit for input services used in manufacturing goods cleared for export is admissible only from 14.03.2006 onwards as per Notification No. 5/2006-CE (NT). The appellant's appeal before the Ld. Commissioner (Appeals) was also rejected, leading to the current appeal before the Tribunal.The appellant's advocate argued that a similar issue was decided in favor of the assessee by the Tribunal in a previous case. The Revenue's representative reiterated the findings of the Ld. Commissioner (Appeals). After hearing both parties and examining the records, the Tribunal found that the only ground for rejecting the refund claim was the absence of a prescribed procedure for filing the claim during the relevant period. The Tribunal referred to a previous judgment where it was held that Rule 5 of Cenvat Credit Rules, 2004 allowed for the refund of credit on input services used in manufacturing goods cleared for export even before the specific notification was issued.The Tribunal emphasized that the substantive benefit provided under Rule 5 of Cenvat Credit Rules, 2004 cannot be denied to the appellant due to the lack of a prescribed procedure for filing the refund claim. Citing previous judgments, the Tribunal concluded that the appellant is entitled to the refund claim despite the absence of a specific notification during the relevant period. Consequently, the order of the Ld. Commissioner (Appeals) was set aside, and the appeal filed by the appellant was allowed.