TaxTMI 
TaxTMI 
2018 (8) TMI 890
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....nt 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 legislation and hence principal legislation should prevai....
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....sed 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 Credit Rules, 2004 is reproduced below:- "RULE [5. Refund of CENVAT Credit. - (1) A manufacturer who clears a final product or an intermediate product fo....
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....s 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 Central Excise Act, 1944 are also extracted below:- "(2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise 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,....
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....tification 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 provisions for refund of Cenvat credit, the legislative intention, which is unambiguous, will have to be given effect to in consonance with the definition of export goods as contained in Rule 5. 10. The other contention of the appellant is that Section 11B of the Act governs refunds and Rule 5, which is subordinate to the principal legislation cannot suppla....
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....ion. 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. Advocate, which leads to conclusion that the Ministry should not have issued such amendment in the Rule 5 by way of notification restricting the refund under the said Rule to physical export, does not appeal to me. In as much as I am not sitting in the capacity of law makers and as such, I cannot deal with the contention of the ld. Advocate. The Tribunal being a creature of....
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....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, designed to avoid hardship in cases where a party does all that can be reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of ea....
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....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 court either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The court cannot add words to a statute or read words into it which are not there. The court cannot, on an assumption that there is a defect or an omission in the words used by the legislature, correct or mak....
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....le 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 indirectly. On surrendering of their licence, the appellants were not allowed to claim the refund of the unutilized credit in the Modvat account, and the same would have lapsed. As such, utilization of the same towards payment of disputed demand of duty, after surrendering of their registration, has not led to a situation where the assessee was compelled not to use the credit for regular clearances and had to make payment from PLA. As such, in this case ....
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....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 attributes of a precedence not laying down the law for which present reference was warranted. It may further be stated that in Gouri Plasticulture's case the question had presupposed that refund was "otherwise due". But how such due arose, that does not come out from any of the paragraphs of the order reported in 2006 (202) E.L.T. 199 (Tri.-LB.). The present reference is not on the premise of refund otherwise due for which that has rightly been made for answer by Larger Bench. ....
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....tion 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 of the said judgment, being pertinent to the matter at hand, are extracted below:- "5.3 Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity (Ref : State Bank of Travancore v. Commissioner of Income Tax (1986) 2 SCC 11, p.68. : AIR 1986 SC 757). It has also been said that if taxing provision is "so wanting in clarity that no meaning is reasonably clear, the court will be unable to regard it....
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....e 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. Since the rebate application was filed within a period of one year from the date of shipment, the respondent claimed that they were in time. Further, the Proviso to Rule 12 (1) of Central Excise Rules, 1944, which allowed the Commissioner to allow rebate even if some conditions had not been met. In these sets of facts, the Hon'ble Supreme Court by relying on the ratio of Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.) held that since the claims for reb....
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....interpreting 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 a specific provision regarding pilferage goods under Section 13 and the claim was made under Section 23 of the Custom Act, 1962. Since there were two conflicting sections, the Hon'ble High Court held that when there is a provision which deals with a specific situation, the general provision in the later part of the statute even if encompassing the situation already dealt with would not be applicable on the account of pilferage. In the present case, the provision in Rule 5 of CCR is a specific provision....