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of <h1>CESTAT allows refund of unutilized CENVAT credit under Rule 5 when goods exported through warehouse procedure</h1> <h3>M/s. NTN Nei Manufacturing India Pvt. Ltd. Versus Commissioner of GST & Central Excise, Chennai Outer Commissionerate</h3> M/s. NTN Nei Manufacturing India Pvt. Ltd. Versus Commissioner of GST & Central Excise, Chennai Outer Commissionerate - TMI Issues:Refund of unutilized CENVAT credit under Rule 5 of CCR 2004 for goods supplied to export warehouse, manufacturing activity requirement for claiming refund, procedural defects in clearance to export warehouse, applicability of Tribunal decisions, scope of show cause notice, liberal interpretation of taxing statute for export benefits.Analysis:The appeals involved a dispute regarding the appellant's entitlement to a refund of unutilized CENVAT credit under Rule 5 of CCR 2004 for supplying automobile bearings to an export warehouse owned by M/s. Nissan Motors India Pvt. Ltd. The appellant filed four refund claims for different quarters, which were rejected by the Original Authority and Commissioner (Appeals). The main issue was whether the physical export requirement for a refund under Rule 5 was satisfied when goods were cleared to the export warehouse and subsequently exported. The appellant argued that Circular No. 581/18/2001 CX clarified that refunds for supplies to export warehouses were admissible. They also relied on the Gujarat High Court decision regarding clearance between 100% EOUs. The appellant contended that the denial of refund based on manufacturing activity not being undertaken was beyond the scope of the show cause notice. They emphasized that their eligibility for CENVAT credit was not questioned, citing relevant case laws. Additionally, they highlighted that similar refunds for different periods had been sanctioned by the department.The impugned order raised concerns about procedural defects in the clearance process to the export warehouse, indicating that the clearance remained domestic. It was found that the appellant did not engage in any manufacturing activity to claim a refund under Rule 5 of CCR 2004. However, the issue of manufacturing activity was not part of the show cause notice, leading to a violation of natural justice principles. Citing the Supreme Court precedent, the order set aside this part of the decision. The order also referenced a Tribunal decision regarding supplies to a SEZ unit, which was distinguished from the present case involving physical exports by the export warehouse. The judgment in K.P. Verghese v. Income Tax Officer was cited to support a liberal interpretation of taxing statutes for export benefits. It was concluded that when the ultimate export of goods was not contested, the refund should be allowed to a DTA unit, even if the physical export was carried out by the exporter registered under Rule 20 of C. Ex. Rules, 2002. The order set aside the impugned decision and allowed the appeals with consequential relief, emphasizing a pragmatic and beneficial approach in interpreting export-related provisions.
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