CESTAT Mumbai grants refund of unutilized input credit for exports under Rule 5 CENVAT Credit Rules 2004

CESTAT Mumbai allowed the appeal regarding refund of unutilized input credit for exports under Rule 5 of CENVAT Credit Rules, 2004 and Notification No. 5/2006-C.E.(N.T.) for January-March 2009. The tribunal found the appellant eligible for refund of Rs.4,22,558/- comprising Rs.3,44,804/- for inputs and Rs.77,754/- for input services, calculated after proper adjustments and applying the prescribed export turnover ratio formula. The original authority and Commissioner (Appeals) orders rejecting the refund claim were set aside, with the tribunal re-determining the eligible refund amount from the total claimed amount of Rs.13,37,072/-.

---

---

Issues Involved:
1. Eligibility for Refund of CENVAT Credit
2. Mis-declaration and Suppression of Facts
3. Compliance with Rule 5 of CENVAT Credit Rules, 2004 and Notification No. 5/2006-CE(NT)

Summary:

1. Eligibility for Refund of CENVAT Credit:
The appellant, M/s Monomer Chemical Industries Private Limited, engaged in the manufacture of Organic Chemicals, filed a refund claim dated 29.12.2009 for unutilized input credit of Rs.13,37,072/- for the period January to March 2009. The jurisdictional Assistant Commissioner sanctioned Rs.4,22,558/- out of the total claim. The Department appealed, arguing that the original authority did not address all conditions under Rule 5 of CENVAT Credit Rules, 2004. The Commissioner (Appeals) rejected the refund claim, leading to the appellant's appeal before the Tribunal. The Tribunal remanded the case for re-adjudication, and the Deputy Commissioner sanctioned Rs.77,754/- and demanded Rs.3,44,804/- erroneously refunded. The Commissioner (Appeals) upheld this order, prompting the appellant's current appeal.

2. Mis-declaration and Suppression of Facts:
The original adjudicating authority found that the appellant mis-declared that no separate claim for rebate or drawback was made. The appellant exported goods under UT-1 and claimed drawback, which was suppressed while filing the refund claim. The appellant failed to provide details of inputs utilized and credit involved, leading to the rejection of the refund claim.

3. Compliance with Rule 5 of CENVAT Credit Rules, 2004 and Notification No. 5/2006-CE(NT):
The Tribunal examined the conditions under Rule 5 and Notification No. 5/2006-CE(NT). The appellant exported goods without payment of duty under bond/LUT, fulfilling the condition for refund eligibility. The formula prescribed in the rule was applied correctly, and the refund was restricted to the extent of export turnover. The appellant provided the required documents, and the original authority's calculation of eligible CENVAT credit was found to be correct.

Conclusion:
The Tribunal found the appellant eligible for a refund of Rs.4,22,558/-, setting aside the impugned order dated 21.08.2018, which had confirmed the adjudged demands and rejected the appeal. The appeal was allowed in favor of the appellant.

Order Pronounced:
(Order pronounced in open court on 22.04.2024)

---