Appellant entitled to refund claim for input duty on supplies to Export Oriented Unit

The appellant was held entitled to the refund claim of input duty for input service used in manufacturing final products supplied to a 100% Export Oriented Unit (EOU) as deemed export. The Member (Judicial) determined that supplies to a 100% EOU should be considered as export, including deemed export, under the amended Rule 5 of Cenvat Credit Rules 2004. The appellant's appeal was allowed, modifying the impugned orders, while the appeals filed by the Revenue were dismissed.

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Issues:
Refund claim of input duty for input service used in manufacturing final product supplied to 100% EOU as deemed export - Interpretation of amended Rule 5 of Cenvat Credit Rules 2004 - Eligibility of refund for supplies to 100% EOU as deemed export.

Analysis:
The issue in this case revolved around a refund claim of input duty for the input service used in the manufacturing of a final product supplied to a 100% Export Oriented Unit (EOU) as deemed export. The Ld. Commissioner (Appeals) partially allowed the refund claim, citing the amended Rule 5 of Cenvat Credit Rules 2004, which prescribed a formula and a specific definition of export turnover of service. The Commissioner contended that under the amended Rule, supplies to 100% EOU cannot be treated as deemed export, thus making the refund inadmissible. Both the Revenue and the appellant filed appeals against the decision - the Revenue appealing the part refund allowed and the appellant appealing the part refund disallowed.

During the proceedings, the Ld. Superintendent (A.R.) representing the Revenue reiterated the findings of the impugned order, where the refund was rejected. He argued that under the amended Rule 5, only physical exports, i.e., taking goods out of India, were eligible for the refund, not deemed exports. He relied on a judgment by the Principal Bench of the Tribunal in a similar case to support his argument.

On the other hand, the Ld. Advocate for the assessee argued that both refund claims were for a period after 1.4.2012 when the amended Rule 5 was in operation. She contended that supplies made to 100% EOU should be considered as export, including deemed export. To support her argument, she cited several judgments where similar issues were decided in favor of the assessee.

After considering the submissions from both sides and examining the relevant rules and judgments, the Member (Judicial) found that the term 'export' under the amended Rule 5 of Cenvat Credit Rules did not differ significantly from the unamended rule. Therefore, the judgments cited by the Ld. Advocate were deemed applicable post 1.4.2012. The Member distinguished the judgment relied upon by the Revenue, noting that it pertained to supplies made to a Special Economic Zone (SEZ) and not to a 100% EOU. Consequently, the appellant was held entitled to the refund under Rule 5 for supplies made to the 100% EOU, leading to the modification of the impugned orders. The appeal filed by the party was allowed, while the appeals filed by the Revenue were dismissed.

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