TaxTMI 
TaxTMI 
2021 (2) TMI 472
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....fund claim of Rs. 96,53,590/- (Rupees Ninety Six Lakhs Fifty Three Thousand Five Hundred and Ninety only) for the period January 2015 to March 2015 claimed by the Noticee under Rule 5 of The CENVAT Credit Rules, 2004 and 27/2012CE$ (NT) dated 18.06.2012 issued thereunder read with Section 11B of the Central Excise Act, 1944." 2.1 Appellant is engaged in manufacture of excisable goods namely Electrostatic Precipitator, Supporting Components and Structures etc., classifiable under Chapter 73 and 84 of the First Schedule to the Central Excise Tariff Act, 1985 as it existed then. They had supplied certain goods claiming exemption under S No 336 of Exemption Notification No 12/2012-CE dated 17.03.2012 to a project awarded against International Competitive Bidding. 2.2 Claiming these supply to be deemed exports, appellants preferred a refund claim of Rs. 96,53,590/- (Rupees Ninety Six Lakhs Fifty Three Thousand Five Hundred and Ninety only) for the period January 2015 to March 2015 claimed by the Noticee under Rule 5 of The CENVAT Credit Rules, 2004 read with 27/2012-CE$ (NT) dated 18.06.2012. 2.3 Since revenue was of the opinion that goods supplied claiming exemption under Noti....
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....f the goods under ICB, which qualify as deemed exports. • Clause (1A) to Explanation 1 to Rule 5 inserted w.e.f 01.03.2015 is prospective and will not apply to refund claims pertaining to period prior to this date. In their case the refund claim has been made for the supplies made by them during the period January to March 2015, to the project claiming the benefit of exemption under S No 336 of Exemption Notification No 12/2012-CE dated 17.03.2012 to a project awarded against International Competitive Bidding. Therefore the supplies made by them during the months of January and February shall not be hit by this explanation. • The decisions relied upon by the learned Commissioner (Appeal) in his order and Authorized Representative during the course of argument are clearly distinguishable and will not apply to their case. 3.2 Countering the arguments made by the learned counsel, Learned Authorized while reiterating the arguments advanced by the Commissioner (Appeal) in order in appeal, further submits,- • There is no term like "deemed exports" defined under the Central Excise Act, 1944 or the CENVAT Credit Rules, 2004. Plain readi....
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....ject awarded under ICB, treating such supplies to be deemed exports. 4.2 Rejecting the arguments advanced by the appellants Commissioner (Appeal) has in impugned order recorded as under: The main grounds on which the refund claim has been rejected by the lower authority is that the appellant has cleared goods in question under Notification No 12/2012-CE dated 17.03.2012 (Sr No 336) read with condition No. 41, against ICB at Nil rate of Central Excise Duty. The supply of goods made against ICB are' treated as "deemed export" in terms of para 8.1 and 8.2 or Foreign Trade Policy. And as per para 8.3 of foreign Trade Policy, the goods cleared against ICB are eligible for only three benefits viz. Advance Authorization / Advance Authorization for annual requirement, DFIA, Deemed Export Drawback and Exemption from terminal excise duty where supplies are made against ICB only 35. Before proceeding any further, I would firstly like to bring home the point that the said refund claim has been filed for the period January 2015 10 March 2015 under Rule 5 of the CENVAT Credit Rules, 2004 and the notification applicable during the relevant time which pre....
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....ined in Section 2 of the Customs Act 1962 has been incorporated in Central Excise Rules 2002 vide Notification No. No.8/2015-NT dated 01-03-2015 and in the CENVAT Credit Rules, 2004 vide Notification No. No.6/2015-NT dated 01-03 2015. These notifications are clarificatory in nature and are very much applicable for earlier cases. Thus it is not correct to interpret that inclusion of physical exports in Rule 5 of the Cenvat Credit Rules, 2004 implies that prior to this date all other exports including deemed exports can qualify for - the refund of unutilized Cenvat Credit under Rule 5 of CENVAT Credit Rules, 2004. The inclusion of definition is only clarificatory in nature and importing definition of export from the Customs Act 1962 for earlier period is the only and correct option. The Appellant has during the personal hearing stated that they are not entitled to the refund claim-after 1.3.2015 and are not filing claim since 1.4.2015. 40. In this regard, I take support from the decision of the Hon'ble Tribunal in the case of COMMR OF C. EX., THANE-I Versus TIGER STEEL ENGINEERING (I) PVT. LTD.(2010 (259) E.L.T(375) (Tri-Mumbai) wherein it was held that: ....
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....nnot mean that inputs received by 100% EOU have not been exported - Once CT-3 certificate received indicating receipt of goods by 100% EOU, supplies to 100% EOU to be considered as deemed export - However, refund having been claimed under Central Excise Act, there have to be physical exports and not deemed exports - Since appellants not physically exported goods but merely supplied the goods to 100% EOU, provisions of Rule 5 of Cenvat Credit Rules, 2004 not applicable - Refund denied. [paras 5, 6]" 42. In this regard CESTAT, Principal Bench, New Delhi, in the case of : Tricolite Electrical Industries Ltd Vs Commissioner of C.Ex, Delhi III, Gurgaon 2012 (282) ELT 468 (Tri- Delhi) has clearly held that clearances. made to 100% EOUs or to the projects for which C. Ex duty is exempted cannot be treated as export for benefits under Rule 5 of the CCR 2004. The relevant para of the said judgment reads as under: "6. The point of dispute in this case is as to whether cash refund of accumulated Cenvat credit in respect of inputs/input services used in manufacture of finished goods, which were either supplied to other 100% EOUs or supplied to DMRC by availing ful....
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....d that such refund is only due if the goods are taken out of India lo a place outside India and therefore the supply of goods against ICB cannot be treated as export for the purpose of Rule 5 of CCR 2004. Thus, in view of the above stated decisions of Hon'ble CESTAT, I find that supply of goods against International Bidding cannot be treated as "export" for the purpose of Rule 5 or CCR 2004 and thus find that the refund has rightly been rejected by the lower authority,. 44 The various case laws cited by the appellant do not come to their rescue as the facts are different and they pertain to 100% EOUs. I also find that the earlier Order in Appeal passed by my predecessor namely No NGP/EXCUS/000/APPL 227/14-15/798 dated 22.12.2014 and No NGP/EXCUS/000/APPL/222/15-16/1010 dated 06.07.2015 has not dwelled into the definition of export goods and the only question addressed in the said appeal was as to whether the assessee can file a single claim or they should file the claims on quarterly basis." 4.3 Rule 5 of the CENVAT Credit Rules, 2004 as substituted by the Notification No 18/2012-CE (NT) dated 17.03.2012 is reproduced below along with the relevant para o....
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....otification No 27/2012-CE (NT) dated 18.06.2012 G. S. R -(E).- In exercise of the powers conferred by rule 5 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the "said rules"), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No 5/2006 - Central Excise (N.T), dated the 14th March, 2006, published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 156(E), dated the 14th March, 2006, the Central Board of Excise and Customs hereby directs that refund of CENVAT credit shall be allowed subject to the procedure, safeguards, conditions and limitations as specified below, namely:-. 2.0 Safeguards, conditions and limitations.- Refund of CENVAT Credit under rule 5 of the said rules, shall be subjected to the following safeguards, conditions and limitations, namely:- (a) ........ (b) ........... (c) the value of goods cleared for export during the quarter shall be the sum total of all the goods cleared by the exporter for exports during the quarter as per the monthly or quarterly return filed by the claima....
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....results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation." 4.5 Further Rule 6 (6) of the CENVAT Credit Rules, 2004 categorized the clearances of the goods, without payment of duty, but in respect of which the provision of Rule 6 (1), (2), (3) & (4) were not applicable. In the said Rule also the clearances for export under bond and the clearances made under the exemption Notification No 12/2012-CE (Sr No 366) under separate categories. The text of the said sub-rule, is reproduced below: Rule 6 (6) of the CENVAT Credit Rules, 2004 as it existed at the relevant time' - (6) The provisions of sub-rules (1....
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....9) of the Customs Act, 1962. Since this clause only clarifies the intention of the legislature, in respect of the applicability of the Rule 5, of the CENVAT Credit Rules, 2004 and do not create any additional liability or restricts any benefit to the subjects. The rule 5, only provides for the refund of accumulated CENVAT Credit in respect of the goods cleared for export under bond or letter of undertaking. In case such refund is not allowed it do not impact the eligibility of the subject to the CENVAT Credit of the duty paid. The admissibility to the CENVAT Credit needs to be determined in terms of Rule 3, 4, 6 and 9 of the CENVAT Credit Rules, 2004. It is not even the case for the department that the CENVAT Credit is not admissible in such cases. In the case of Dilip Kumar & Co, referred above, Hon'ble Apex Court has further observed: "25. We are not suggesting that literal rule de hors the strict interpretation nor one should ignore to ascertain the interplay between 'strict interpretation' and 'literal interpretation'. We may reiterate at the cost of repetition that strict interpretation of a statute certainly involves literal or plain meaning test. The other tools of ....
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....no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." It was further observed : "In all tax matters one has to interpret the taxation statute strictly. Simply because one class of legal entities is given a benefit which is specifically stated in the Act, does not mean that the benefit can be extended to legal entities not referred to in the Act as there is no equity in matters of taxation...." Yet again, it was observed : "It may thus be taken as a maxim of tax law, which although not to be overstressed ought not to be forgotten that, "the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax on him", [Russel v. Scott, (1948) 2 All ER 1]. The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible [Ormond....
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....tion of a taxing statute : "(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed : it cannot imply anything which is not expressed : it cannot import provisions in the statute so as to supply any deficiency : (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of Legislature's failure to express itself clearly". 27. Now coming to the other aspect, as we presently discuss, even with regard to exemption clauses or exemption notifications issued under a taxing statute, this Court in some cases has taken the view that the ambiguity in an exemption notification should be construed in favour of the subject. In subsequent cases, this Court diluted the principle sayin....
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.... observe how true it is to say that there exists unsatisfactory state of law in relation to interpretation of exemption clauses. Various Benches which decided the question of interpretation of taxing statute on one hand and exemption notification on the other, have broadly assumed (we are justified to say this) that the position is wellsettled in the interpretation of a taxing statute : It is the law that any ambiguity in a taxing statute should enure to the benefit of the subject/assessee, but any ambiguity in the exemption clause of exemption notification must be conferred in favour of revenue - and such exemption should be allowed to be availed only to those subjects/assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and that the claimants satisfy all the conditions precedent for availing exemption. Presumably for this reason the Bench which decided Surendra Cotton Oil Mills case (supra) observed that there exists unsatisfactory state of law and the Bench which referred the matter initially, seriously doubted the conclusion in Sun Export Case (supra) that the ambiguity in an exemption notification should be inte....
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.... of the persons, as may arise within the strict language of the law. There cannot be any implied concept either in identifying the subject of the tax or person liable to pay tax. That is why it is often said that subject is not to be taxed, unless the words of the statute unambiguously impose a tax on him, that one has to look merely at the words clearly stated and that there is no room for any intendment nor presumption as to tax. It is only the letter of the law and not the spirit of the law to guide the interpreter to decide the liability to tax ignoring any amount of hardship and eschewing equity in taxation. Thus, we may emphatically reiterate that if in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/assessee. But, in a situation where the tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue, the aforesaid conclusions are expounded only as a prelude to better understand jurisprudential basis for our conclusion. We may now consider the decisions which support our view. 48. The next authority, which needs to be referred is the case in Mangalore Chemicals (supra). As we have already mad....
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....applicable to the present case. 4.8 The basic principle which has emerged in all such cases of the supplies made to the EOU's is that in respect of the goods supplied to EOU, the clearances have been made under the bond following the procedure as prescribed for such clearances. The goods which have been supplied to the EOU or cleared for exports are not cleared under an exemption notification issued under Section 5 of the Central Excise Act, 1944, but are cleared for export either in finished form or in intermediate state for the production of finished goods which get finally exported. This aspect get well highlighted by the Tribunal in the decision in case of Jimtex Pvt ltd, wherein following has been held: "6. Being aggrieved, the appellant has filed appeal before this Tribunal on the ground among others that the adjudicating authority has exceeded the direction in the remand, which was for verification to the export made i.e. to verify the fact of export from the 100% EOU, which was not done and unnecessarily got into the issue of export vis-à-vis deemed export. The adjudicating authority was required to verify from his counterpart, having jurisdiction over th....
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....ndertaking or used in manufacture of intermediate product for export. Although supplies to SEZ is treatable as export under Section 2(m) of SEZ Act, 2005, in absence of evidence of goods used by 100% EOU/SEZ in manufacture of finished goods exported under Bond, the rejection of refund claim is held proper. 8. Having considered the rival contentions, I find that Appendix to Notification No. 11/2002 wherein clause (4) provides that manufacturer (appellant) is required to submit refund application along with Bill of Lading or shipping bill or export proof duly certified by any office of Customs, to the effect that the goods have in fact been exported. There is no ambiguity in the requirement as the documents referred to under clause (4) are only available in case of actual export and not deemed export. The appellant herein have admittedly failed to furnish the evidence of actual export in spite of opportunity in the second round of litigation. Thus, the rejection of claim by the learned Commissioner (Appeals) is correct and in accordance with law. The rulings relied upon by the appellant do not lay down any ratio of law and only allowed by way of remand. Thus, the appea....
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....lized through the rebate scheme or through Rule 5 of Cenvat Credit Rules, 2004. Supplies to special economic zones are not specified to be so privileged. 8. This is a logical corollary of the deeming of special economic zones as 'outside the customs territory' and, in accordance with which, drawback (at par with exports) is extended to the goods procured from the 'Domestic Tariff Area' by units in special economic zones against foreign exchange. The parity with exports is accorded to supplies effected to Special Economic Zones through the provision of the statute governing such Zones. 9. The decision of the Tribunal in Commissioner of Central Excise, Pune-II v. Quality Screens [2008 (226) E.L.T. 608 (Tri.Mumbai)] makes it amply clear that only physical exports would entitle the refund under Rule 5 of the Cenvat Credit Rules, 2004. The decision of the Tribunal in Commissioner of Central Excise & Service Tax, Rajkot v. Parth Trading Co. [2016 (338) E.L.T. 616 (Tri.-Ahmd.)] relies upon the circular dated 28th April, 2015. Likewise, the decision in Shri Bajrang Power & Ispat Ltd. v. Commissioner of Central Excise, Raipur [2012 (282) E.L.T. 108 (Tri.-Del.)]....
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.... response to the question framed in paragraph 1(a), as to whether, the clearances made by one 100% EOU to another 100% EOU which are deemed export are to be treated as physical export for the purpose of entitling refund of unutilized Cenvat credit, the Hon'ble Court vide paragraph 16 have answered as follows:- "16. In the above fact situation, we are of the view that no question of law much less any substantial question of law, arises out of the order of the Tribunal and even if it arises, the answer is very obvious and we, therefore, hold that the Tribunal is justified and has not committed any substantial error of law in dismissing the appeal of the Revenue and confirming the order of the learned Commissioner (Appeals) holding that the clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004." 7. Reliance placed by the ld. Commissioner (Appeals) in the impugned order in case of Tricolite Electrical Indus. Ltd. (supra) is not applicable to the present case, i....
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.... is evident that neither the appellate authority, nor tribunal nor High Court has dealt the issue on its merit, but have decided the issue holding that the appeal filed by the revenue has travelled beyond the show cause notice. In the case under consideration we find that the show cause notice was specifically issued on these grounds only, para 7, 8 and 9 of the show cause notice read as under: "7. During scrutiny of refund claim it is observed that the Noticee have cleared the goods in question under Notification No. 12/2012-CE dated 17.03.2012 ( Sr. No. 336 read with condition No. 41) against International Competitive Bidding (for short "ICB") at Nil rate of Central Excise Duty. The supply of goods made against ICB are treated as "deemed export" in terms of para 8.1 and 8.2 of foreign Trade Policy. And as per para 8.3 of foreign Trade Policy, the goods cleared against ICB are eligible for only three benefits viz. Advance Authorisation / Advance Authorisation for annual requirement/ DFIA. Deemed Export Drawback and Exemption from terminal excise duty where supplies are made against ICB only 8. In view of the forgoing it appears that the as per explana....