TaxTMI 
TaxTMI 
2009 (5) TMI 498
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....ssed by the Commissioner of Central Excise, (Appeals-II), Bangalore. 4. We heard both sides. 5. The respondents are the manufacturers of PVC Insulated Wires. They availed input credit on the inputs received and claimed that they had utilized it in the manufacture PVC Insulated Wires, which are cleared for export They filed five refund claims for the periods from April, 2005 to August, 2006. However, the Original Authority rejected the refund claims on the ground that the respondents had not fulfilled the conditions of Rule 5 of Cenvat Credit Rules, 2002 read with Notification No. 11 /2005-CE. (N.T.), as amended. The respondents approached the Commissioner (Appeals) for relief. The Commissioner (Appeals) set aside the impugned orders-in-Original and allowed the assessee's appeals with the following findings:- "Findings: The original authority rejected the refund claims under rule 5 of Cenvat credit rules 2004 only on one ground that the appellant is not able to prove one to one correlation of inputs/input credits with that of export goods. I do not find any such requirement of law in the provisions of Cenvat Credit Rules 2004. I find from the records that the appellants ....
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.... attributable to inputs used for export products in cases where for any reasons such credit cannot be utilised for payment of duty for borne clearances by the appellants. In the instant case, I find that there is a cumulative balance in the Cenvat account which is getting accumulated from time to time and the appellant is not in a position to utilise the same for payment of duty on domestic clearance. There is no doubt that the accumulated unutilised credit balances available is the balance amount at the credit of the appellant, after making payment in respect of all domestic clearances. From this said very fact itself it is evident that the appellant is not in a position to utilise the credit availed on inputs used in the manufacture of goods which were exported under bond, which is getting accumulated from time to time. It is for the said reasons Rule 5 of Cenvat credit Rules 2004 provides for sanction of refund in cash in respect of goods exported under bond/letter of undertaking. In the present case, the appellant has fulfilled all the conditions of rule 5 of Cenvat Credit Rules read with Notification No. 11/2002-C.E. (N.T.) dated 1-3-2002 as amended. In this context the assess....
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....ch inputs. (ii) In the light of the above statutory provisions, the Commissioner (Appeals) holding that - 'As long as the specification of inputs used for export product is not in doubt, proportionate credit attributable to inputs is available as rebate in terms of Rule 5 of CCR, 2004' is not legal and proper, in as much as the Rule 5 read with Notification No.11/2002-C.E. (N.T.) dated l-3-2002/05/2006-CE. (N.T.), dated 14-3-2006, does not provide for refund of such proportionate credit. Further, the refund is permissible to the fulfillment of the conditions of the notification. (iii) The Adjudicating Authority has recorded in his findings that -"On perusal of the Daily Production Statement furnished by the assessee it is seen that the inputs received under the invoices, said to have been used in exported goods, were used in the manufacture of "PVC Insulated Wire" and the same were cleared on the same day for Home consumption as well as EOUs. Thus they could not prove that the inputs received were used in the manufacture of exported goods as claimed by them." In terms of section 11A(3)(i) and explanation for the purpose of Section 11B [claim for refund of duty] - "Refund" ....
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....ter making payment in respect of all domestic clearances; that from this fact it is evident that the appellant is not in a position to utilize the credit availed on inputs used in the manufacture of exported goods, which is getting accumulated from time to time. In this regard it is observed that the Commissioner's observation is purely theoretical and based on assumptions and not on the facts. It is on records that the refund claimed by the assessee on the invoices under which the inputs were received were in fact used in the manufacture of final products cleared for home consumption and the credit taken had been utilized for payment of duty on home clearances. For example, in Invoice No. TW/600022 dated 8-4-2006, a quantity of 14,891/- kgs of copper rods were received and issued for production on 8-4-2006, PVC insulated wire was manufactured and subsequently cleared for home consumption [ Production Statement furnished by the assessee is enclosed as Annexure-I]. Thus, the refund of such credit is not envisaged in the law and therefore the above observation of the commissioner (Appeals) is far fetched and which is not provided in law. (vi) Commissioner (Appeals) has further obs....
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.... case of CCE, Kolkata-III v. High Tech K.K. Mfg. Company - 2007 (213) E.L.T. 193 (Tri.-Kolkata), while remanding the case for re-examination, has held that - "Refund admissible if conditions of notification fulfilled - Safeguards, conditions and limitations in notification to be meticulously examined." The adjudicating authority in his Order in Original had clearly examined the issues properly and has held that the assessee has not fulfilled the conditions of Rule 5 read with Notification No.11/2002-C.E. (N.T.) dated 1-3-2002/05/2006-C.E. (N.T.), dated 14-3-2006. Commissioner (Appeals) without proper examination of the conditions of Rule 5 read with Safeguards, conditions and limitations specified in Notification No. 11/2002-C.E. (N.T.) dated 1-3-2002/05/2006-C.E. (N.T.) dated 14-3-2006, had set aside the Order of the adjudicating authority which is not legally proper and correct. 5. In the light of the above, we are of the opinion that the said OIA is not legal and proper. Therefore, in exercise of powers vested on us under sub-section (2) of Section 35B of the Act, we hereby authorize and direct the Deputy Commissioner of Central Excise (Review), Bangalore III Commissionera....
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.... of the Hon'ble Apex Court in the case of CCE, Pune v. Dai Ichi Karkaria Ltd. - 1999 (112) E.L.T. 353 (S.C.). Wherein it was held that "it is wrong to say that credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on final product manufactured on the very day that it becomes available". (iv) Further, our attention was invited to the Chartered Engineer's Certificate that the inputs were used in the manufacture of goods exported. There is no material led in by the Revenue, apart from inferring from the Daily Production Report that these inputs have not been used in the goods exported. Further, the following details were given in respect of the Cenvat Credit. (a) OB of Cenvat credit as on 1-7-2006 Rs. 2,88,41,175/- (b) Total credit availed during 7/06 to 8/06 Rs. 2,55,80,187/- (c) Amount debited for home clearances Rs. 1,48,10,146/- (d) Balance of Cenvat credit as on 31-8-06 Rs. 3,96,11,217/- (e) Refund of unutilized credit claimed on goods exported Rs. 32,60,513/- During the relevant period, they had exported ....