Tribunal grants refund on export services under Cenvat Credit Rules

The Tribunal allowed the appeals, setting aside the order rejecting the refund claims. It determined that the goods were not exempted, supporting the appellant's eligibility for a refund under Rule 5 of the Cenvat Credit Rules, 2004. The Tribunal also clarified that registration as a manufacturer of excisable goods was not a prerequisite for claiming a refund on exported services. The decision was pronounced on 04.12.2018.

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Issues:
Refund claim under Rule 5 of Cenvat Credit Rules, 2004 rejected due to goods being exempted; Appellant's eligibility to avail cenvat credit on input services disputed; Allegation of appellant not being registered as manufacturer of excisable goods challenged.

Analysis:
The appellant, engaged in manufacturing and export of gems and jewellery, filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004 and Notification No. 27/2012-CE. The Department rejected the claim, citing the goods as excisable but exempted under Notification No. 12/2012. The appellant argued that the goods should not be considered exempted, thus eligible for refund. The Department applied Rule 6(1) and Rule 7 of CCR, 2004 to reject the claim, which the appellant contested, citing CBEC Circular No. 278/112/96-CK. The appellant contended that the goods did not fall under exempted categories per Rule 2(d) of CCR, 2004, seeking to set aside the order and allow the appeal.

The Tribunal observed that the appellant's refund claim was based on fulfilling conditions under Rule 5 of CCR, 2004, requiring clearance of final products for export under bond or letter of undertaking. The appellant's eligibility for credit was disputed due to the goods being excisable but exempted. The Tribunal referred to legal advice and circulars to establish that goods exported under bond are not exempted, supporting the appellant's claim for refund. Referring to past tribunal decisions, the Tribunal held that Notification No. 12/2012 did not apply to the export of excisable goods, supporting the appellant's position.

Regarding the allegation of the appellant not being registered as a manufacturer of excisable goods, the Tribunal noted that Rule 3 of Cenvat Credit Rules, 2004 does not mandate registration for credit. Citing precedent, the Tribunal held that registration was not a requirement for claiming refund on exported services. The Tribunal also found the Commissioner(Appeals)'s finding on registration not sustainable, noting the appellant's centralized service tax registration for its units.

Lastly, concerning the non-distribution of credit, the Tribunal reiterated that the goods were not exempted, rendering Rule 7(b) of CCR, 2004 inapplicable. Consequently, the Tribunal set aside the order rejecting the refund claims and allowed the appeals, pronouncing the decision on 04.12.2018.

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