TaxTMI 
TaxTMI 
TaxTMI 
2010 (10) TMI 190
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....the period April 2003 to September 2005, the respondent cleared various consignments of Polyester Texturised Yarn for export under bond. In view of such exports, the respondent was neither able to utilize the cenvat credit of duty paid on the inputs used in the manufacture of Polyester Texturised Yarn so exported, nor was able to adjust such credit towards payment of duty on the final products cleared for home consumption. The respondent, therefore, filed various refund claims under Rule 5 of the CENVAT Credit Rules, 2002/2004 (the Rules) claiming refund of the cenvat credit of duty paid on inputs used in the manufacture of Polyester Texturised Yarn which was exported under bond. The refund claims made by the respondent came to be sanctioned under the provisions of Rule 5 of the Rules read with Notification No. 11/2002 C.E. (N.T.) dated 1-3-2002 as amended by Notification No. 49/2003 C.E. (N.T.), dated 17th May, 2003, vide various orders passed by the Adjudicating Authority. However, the refunds so sanctioned were paid after the expiry of a period of three months from the date of making the refund applications. The respondent, therefore, filed applications claiming interest on dela....
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....n from the impugned order of the Tribunal, the Tribunal has held that in view of the provisions of clause (c) of the proviso to Section 11-B, the provisions of Section 11B of the Act, and consequently the provisions of Section 11-BB of the Act are clearly applicable to the facts of the present case and therefore, the assessee is entitled to interest. The Tribunal has also taken note of the fact that C.B.E. & C. Circular No. 130/41/95-CX., dated 30-5-95 included receipt of credit of duty paid on excisable goods used as input in accordance with Rule 57F also amongst the type of claims wherein interest under Section 11BB may be payable. 6. Thus, the controversy in issue in the present appeal is as to whether the provisions of Section 11BB of the Act would be attracted in case of delay in sanctioning refund under Rule 5 of the Cenvat Credit Rules. In this regard it may be germane to refer to the provisions of Sections 11B and 11BB of the Act and rule 5 of the Rules, which insofar as the same are relevant for the present purpose read thus : "11B. - Claim for refund of duty - (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make....
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....with the rules made, or any notification issued, under this Act; (d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such [duty and interest, if any paid on such duty] to any other person; (e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (f) the duty of excise and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : xxxxxxx 11BB. Interest on delayed refunds. - If any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, [not below five per cent] and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government, by Notification in the Official Gazette, on such....
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....ment has issued Notification : 11/2002-C.E. (N.T.), dated 1st March, 2002 providing for the procedure for refund of Cenvat credit under rule 5 of the Cenvat Credit Rules and lays down the safeguards, conditions and limitations subject to which such refund may be allowed. A perusal of the said notification indicates that the safeguards, conditions and limitations are all procedural and provide for the manner in which application for refund is to be made and provides for giving an undertaking to refund the amount in case of any refund erroneously paid. Neither the Cenvat Credit Rules, 2002/2004 nor the above referred notification, provide for payment/non-payment of interest in case of delay in sanctioning the refund. 8. The provision for claiming refund of duty under the principal statute, viz., the Central Excise Act, 1944 is under Section 11-B of the Act. Under sub-section (2) thereof, if the officer concerned, on receipt of any application for refund, is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he is required to make an order accordingly and the amount so determined is required to ....
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....e under Section 11BB of the Act in case of delay in sanctioning refund under Rule 5 of the Rules. 11. There is a basic fallacy in the premise on which the contention of Revenue is based. Cenvat credit is nothing else but credit for duty paid by the supplier of inputs, which are dutiable goods manufactured by the supplier or dutiable services rendered by the service provider. In principle such goods/services when utilised for further manufacture or providing service which are dutiable already carry the duty paid component as a part of its price/value, and hence the duty payable on the ultimately manufactured goods/services rendered stands reduced to the extent of duty already paid on the inputs. Thus the duty paid on inputs by the supplier has already been actually received by the exchequer. Therefore, this contention is, to say the least, misconceived. 12. On the facts and in the circumstances of the present case, admittedly the refund has been ordered under Rule 5 of the Rules and there was a delay in sanctioning the refund, in the circumstances, the provisions of Section 11BB of the Act would clearly be attracted and as such the Tribunal was justified in holding that ....