TaxTMI 
TaxTMI 
2018 (8) TMI 890
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....h the refund claims against which the appellant went in appeal. In appeal before the Commissioner (Appeals), the refund claims for January and February, 20015 were allowed to the appellant but the claims for the month of March, 2015 was rejected. Further, the order of the adjudicating authority rejecting refund for the quarter April to June, 2015 was upheld. Aggrieved from the same, the appellant have filed these appeals. 3. Ld. Advocate for the appellant submits that the appellant cleared the finished goods without payment of duty under Notification No.12/12 dated 1.3.2012 which exempts the goods supplied to Mega Power Projects. The contention of the appellant is that Rule 5 of Cenvat Credit Rules, 2004 does not deal with deemed exports and refunds are governed by parent Act. He further argued that Section 11B is a complete code in itself to deal with refund of duty. He invited attention to the clause (c) of proviso to sub-section (2) of Section 11B of the Act and contended that the refund is governed by Section 11B of the Act, which is principal legislation and not by Rule 5. He contended that Rule 5 of CCR being subordinate legislation cannot supplant the principal legislatio....
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....uty used as inputs in accordance with rules made, or any notification issued, under this Act" in the said sub section. He further contended that based on said sub section, refund under Rule 5 of CCR is enabled by Section 11B(2c). In view of this sub-section, there is no contradiction in Section 11B, Rule 5 and the notification. He further argued that any change in Rule or notification is to be read with Section 11B and there is no conflict between Section 11B and the Rules. He also relied on the case law of Malaysian Airlines (supra) to argue that the primary statute empowers these rules and there was no conflict in Section 11B and the Rules. He also contended that the judgment of Lucid Colloids Ltd (supra) was not applicable as there was no contradiction between Section 11B and the notification. 5. Heard both sides and examined the record. 6. The common issue involved in these appeals is whether the goods supplied to a Mega Power Project, treated as deemed export in terms of Foreign Trade Policy, are eligible for refund under the provisions of Rule 5 of Cenvat Credit Rules, 2004 for the period from March, 2015 to June, 2015. For the sake of convenience, Rule 5 of Cenvat Cred....
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....under this rule, as existing, prior to the commencement of the CENVAT Credit (Third Amendment) Rules, 2012, within a period of one year from such commencement : Provided further that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the [Service Tax Rules, 1994] in respect of such tax. Explanation 1. - For the purposes of this rule, - (1) "export service" means a service which is provided as per [rule 6A of the Service Tax Rules, 1994]; [(1A) "export goods" means any goods which are to be taken out of India to a place outside India.] (2) "relevant period" means the period for which the claim is filed. Explanation 2. - For the purposes of this rule, the value of services shall be determined in the same manner as the value for the purposes of sub-rules (3) and (3A) of rule 6 is determined.]" 7. For ease of reference, relevant portions of Section 11B (2) of Cent....
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....able to them is not tenable. As they themselves have filed both their claims under Rule 5 of CCR, both the lower authorities have correctly dealt with their claim in terms of that Rule. Further, the contention of the appellant that Rule 5 deals with only physical export of goods is untenable. Admittedly, prior to the amendment in Rule 5 brought about vide Notification No.6/15-CE, under Rule 5 refund has been allowed in respect of physical exports of goods as well as deemed exports. In view of the above factual position, it is clear that the amendment has been made with a view to restrict refund to the goods which are physically exported out of India and, by necessary implication, deemed exports have been disallowed the facility of refund of credit as a result of insertion of clause (1A). It is also settled principle of interpretation what has not been included in a particular provision by necessary implication stands excluded from that provision, even if it is not expressly excluded. The definition of export goods thus inserted makes legislative intent clear that refund should be allowed only in respect of physical export of goods and not for deemed exports. While interpreting the ....
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....ear and unambiguous wording of section. The question of refund of such credit emerges only after it has already been availed under Rule 3 of Cenvat Credit Rules. Related argument advanced by the appellant is that Rule 5 is not applicable as the principal statute overrides the Rule. The contention is that Rule 5 cannot supplant the Section but can only supplement the Section. I find that this argument of the appellant is made on the assumption that Section 11B permits refund and Rule 5 being contrary to the principal legislation should pave the way for said section. I find that in the instant case there is no conflict between the primary statute and the delegated provisions as the primary statute has made the provision of allowing the refunds as per Rule 5 of CCR and Notification issued under the Act and any restriction made in the said Rules on any category of exports imposed by legislature is in consonance with the Section 11B of the Act 11. Another argument advanced by the appellant is that the benefit of credit which was given by one hand cannot be denied by other hand and the credit which has been permitted cannot be curtailed or denied. I find that the argument of the Ld. A....
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....ould be refunded. It is pertinent to mention that during the period, impugned in the said case, there was no express provision to grant refund of accumulated credit except in case of exports. The distinction between the physical exports and deemed exports also did not exist at that time. In these set of facts, the larger bench of this Tribunal held that the claim for refund was inconceivable when right to refund did not accrue under the law and claim for refund was not a matter of right unless vested in law. In this regard, the findings of the Tribunal in para 5.7. to 5.16 are highly relevant and the same are extracted below:- "5.7 A distinction between provisions of statute which are of substantive character and are built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. An eligibility criteria to get refund calls for a strict construction, although construction of a condition thereof may be given a liberal meaning if the same is directory in nature. The doctrine of substantial compliance is a judicial invention, equitable in nature, designe....
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.... Statute are Paramount Considerations 5.9 The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the "substance" or "essence" of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential. In the cases of refund substantial compliance to the law granting refund is sine qua non. Courts have to decide what the law is but not what it should be 5.10 In a plethora of cases, it has been stated by various judicial pronouncements that where, the language is clear, the intention of the legislature is to be gathered from the language used. It is not the duty of the cour....
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.... payment of duty in cash during that period. It was further held that if no cash payment towards duty were made through PLA and credit would have remained unutilized in the account books, such credit cannot be allowed by way of cash. 5.13 While arriving at the aforesaid conclusion, the Larger Bench in Para 11 of the order recorded the fact that in the case before them debit entry in credit account was made by the Appellants on 23-11-2000 while central excise registration was surrendered by the assessee in September 2000 i.e., before making the debit entry in RG-23 account. Further observation of the Bench was even if the amounts towards duty would not have been debited by them in the said account, the same would have been remained unutilized. As such, on the success of their appeal before the Commissioner (Appeals), they cannot claim the refund of the same in cash, inasmuch as on account of such debit entry, they have not discharged any duty out of PLA. If the said refund is granted to the appellants by way of cash, the same would amount to enrich him unjustifiably. It is well settled principles of law that what cannot be done directly should not be allowed to be done indi....
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....ns, whatsoever (which may be closure of his factory or final products being exempted, etc.) the refund becomes admissible in cash or by way of credit entry in PLA to the extent duty paid in cash or out of PLA during the relevant period." 5.15 The decision made in Gauri Plasticulture (P) Ltd. was called for on the question before the Larger Bench as framed in Para 1 thereof. At the cost of repetition it may be stated that the question before Larger Bench in that case was "whether duty debited in RG-23 A Part II can be refunded in cash, when the refund becomes otherwise due" [Emphasis supplied]. But the conclusion in that case as per Para 10 was that if denial of credit has compelled an assessee to pay duty out of PLA, the refund of the same would be admissible in cash to the extent of payment of duty in cash during that period. However, if no cash payments towards duty were made through PLA and the credit would have remained unutilized in the account books, such credit cannot be allowed by way of cash. Such decision does not appear to have flown from the question appearing in Para 1 of the Larger Bench decision as stated aforesaid. Therefore such a decision has no attribute....
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....conflict between Rule 3, 4 and 5 of Cenvat Credit Rules. 13. The appellant have also relied upon the judgment of Hon'ble Apex Court in the case of Godawat Pan Masala Products I.P.Ltd. (supra) to argue that the court must harmonise different parts of statute and it cannot be assumed that Parliament had given with one hand but took away by the other. I find that Rule 5 is in consonance with Section 11B (2) (c) of the Act. In the scheme of Cenvat Credit Rules, availment and utilization of credit are permitted from the assessee subject to condition mentioned in the said Rules. Refund in cash is exceptional provision meant for certain categories of assessees including those, who physically export the goods. Hence, the provision after 1.3.2015 which restricts the refund to the category of physical exports cannot be said to take away since the right to refund of Cenvat credit is not a vested right and they are allowed to utilize credit like any other assessee. In this context, in the case of Steel Strips (supra), this Tribunal also laid down that equity considerations are entirely out of place while interpreting tax law. The findings and ratio of the Tribunal as contained in para 5.3 o....
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....f the Hon'ble Rajasthan High Court in the case of Lucid Colloids Ltd. vs. Union of India-2006 (200) ELT 377 (Raj.). In the said case, the issue related to fixing of interest rate under section 11B. Parent section provided that interest should be not below 10% and not exceeding 36% per annum. However, in the Rule 8(3) framed by the Central Government, it was provided that the interest would be at the rate of 2% per month or Rs. 1,000 per day, whichever is higher. In this background, the Hon'ble court held that alternative mode of levy of interest per day was ultra vires to Section 11B. Since there is no conflict between Section 11B and Rule 5 of CCR as elaborated earlier, the ratio of the said case is not applicable to the present case. 16. The appellant have also relied upon the case law of UOI vs. Uttam Steels Ltd. (supra) to argue that in the case of refund, Section 11B has overriding effect. In the said case, the issue related to the limitation to be applied to rebate claims which had been filed on 20.12.1999 beyond the period of six months under Section 11B of the Act. However, the said Section was amended on 12.5.2000 when the period of six months was extended to one year. ....
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....re is no conflict between Rules and Section, hence the ratio of the said judgment is not applicable. 19. The appellant have relied upon the judgment of Hon'ble Madras High Court in the case of Cappithan Agencies (supra). However, the said decision is in the context of Customs Broking Licensing Regulation, 2013 (CBLR, 2013) and not in the context of Cenvat Credit Rules, 2004 under Central Excise Act. The issue in the cited case was whether Regulation 23 of CBLR, 2013 has been rendered otiose by misinterpreting Regulation 19 ibid. However, in the present case, there is no such conflict as the larger bench of the Tribunal in the case of Steel Strips (supra) has held that refund of unutilized credit is not a vested right. Law has only recognized physical exports as eligible for refunds and when right to refund does not accrue, the claim is thus inconceivable. 20. The appellants have also relied on the case of Bharat Earth Movers Ltd (supra) to argue that the provisions in statute should be assigned a meaning and given effect to so that no provision is redundant or otiose. In the said case, the question was whether the loss on account of pilferage could be rejected when there was ....