Rule 5 refund in case of Third party exports under CT-1

[B. Naga Rami Reddy]

Respected Sir/Madam,

We are manufacturers of bulk drugs and export goods through third party by following CT-1 certificate procedure under Rule 19 of Central Excise Rules,2002.We filed Refund claim under the provisions of Rule 5 of Cenvat Credit Rules,2004 with our Central Excise authorities. However, our claim is rejected saying that we are not the exporters as stipulated in the Rule 5 above as we did not export goods directly but sold goods to third party who finally exported.. The said claim was rejected even after our submission with the Authorities that CBEC Circular No.30/2005-customs dt 12.7.2005 has clarified that 'Third party exports' have been defined to mean exports made by an exporter or manufacturer on behalf of another exporter(s). The CBEC in the above Circular treats us as another exporter (Emphasis supplied). In spite of our claim that we fall under the category of another exporter, our submission ignored and claim rejected. We request the opinion on the matter from the learned experts as whether we are legally eligible for claim.

[CSSANJAY MALHOTRA]

CBEC- Circular No. 30/2005 is of no use as the same deals with Foreign Trade Policy and not specific to Central Excise.

For Refund Under Rule 5 of CENVAT Credit Rules 2004, please refer to NotificationNo. 04/2006 - Central Excise (N.T.) dated 14.03.2006.

Exports executed through Third Parties is also eligible for Refund Under Rule 5 of CCR provided your company's name is mentioned on copy of Shipping Bill as Supporting Manufacturer. Important is Inputs used in the export of goods and furthermore the said Rule does not speaks of Exports executed by Manufacturer Exporters only.

Please go through following citations in erstwhile Modvat Rules, wherein CESTAT has held that Refund of accumulated CENVAT admissible even if the goods are exported through Merchant Exporters.

Cce vs Meghdoot Pistons (P) Ltd. = 2006 (4) TMI 21 - CESTAT, NEW DELHI= 2006 (201) ELT 398 Tri Del=

[B. Naga Rami Reddy]

Thank you Sir for the speedy reply giving case law citation. The claim is rejected though our company's name is mentioned on the copy of Shipping Bill file by third party exporter.

It seems contents of Notification No. 4/2006-CE(NT) are not in vogue but replaced with Notification No, 18/2012-CE(NT) dt 17.3.2012 that substituted new Rule 5 of CCR,2004,

As you opined correctly, this new Rule also does not restrict the benefit under Rule 5 to exports executed by Manufacturer exports alone.

AI Summary

Third-party export refund eligibility: manufacturer can claim CENVAT refund if named on shipping bill under Rule 5. Refund under Rule 5 of the Cenvat Credit Rules is available for exports executed through third parties if the manufacturer's name is shown on the shipping bill as the supporting manufacturer; the Rule does not limit the benefit to direct manufacturer-exporters, and tribunal precedent permits refund when goods are exported via merchant exporters, while trade policy circulars are not determinative of excise refund entitlement.