TaxTMI 
TaxTMI 
2021 (2) TMI 472
X X X X Extracts X X X X
X X X X Extracts X X X X
....ifty 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 Notification No 12/2012-CE (S No 336) do not qualify as export go....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ining 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 reading of the rule 5 of the CENVAT Credit Rules 2004, suggests that this rule is applicable in respect of goods which are exported under bond or letter of undertaking, and not in respect of the goods cleared under exempt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 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 prescribes the safeguards, conditions and limitations for allowing refund under rule 5 of CCR, 2004 is Notf. No. 27/2012 CE (NT) dated 18.06.2012 36. I find that the goods have been cleared at Nil rate of duty under notification No. 12/2012 dated 17-03-2012 and supplied against International Competitive Bidding (ICB). Further I f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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: "11. In the present case, the respondent claimed refund of accumulated CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004. For this benefit, they had to satisfy mainly two conditions viz. (i) the Cenvated inputs should have been used in or in relation to the manufacture of the finished goods supplied to SEZ unit by way of export under Bond/Letter of Undertaking and (ii) the CENVAT Credit taken on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....envat 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 full duty exemption under Notification No. 6/2006-C.E. is admissible or not in terms of the provisions of Rule 5 of the Cenvat Credit Rules. Rule 5 of the Cenvat Credit Rules provides that where any input or input services have been used in the manufacture of final product which is cleared for export under bond or letter of undertaking, or as the case may be, is used in the manufacture of intermediate product cleared for export, or used for out....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 of the notification prescribing conditions and safeguards, Rule 5 of CENVAT Credit Rules, 2004 Refund of CENVAT Credit. - (1) A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subj....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ms 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 claimant. (d) the total value of goods cleared during the quarter shall be the sum total of value of all goods cleared by the claimant during the quarter as per the monthly or quarterly return filed by the claimant. (e) .......... (f) .......... (g) .......... (h) .......... (i) ........... 3.0 Procedure for filing the refund claim. - (a) .......... (b) .......... (c) .......... (d) .......... (e) ......... (f) .......... (g) At....
X X X X Extracts X X X X
X X X X Extracts X X X X
....04 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), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either- (i) cleared to a unit in a special economic zone; or (ii) cleared to a hundred per cent. export-oriented undertaking; or (iii) (iii)cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95-Central Excise, dated the 28th August, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 interpretation, namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well-settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential inferences while considering a taxation statute. 26. Justice G.P. Singh, in his treatise 'Principles of Statu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x 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 Investment Co. v. Betts, (1928) AC 143]. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity [Mapp v. Oram, (1969) 3 All ER 215]. It has also been said that if taxing provision is "so wanting in clarity that no meaning is reasonably clear, the Courts will be unable to regard it as of any effect [IRC v. Ross and Coutler, (1948) 1 All ER 616]." Further elaborating on this aspect, the Learned author stated as follows : "Therefore, if the words used are ambiguous and reasonable open to two interpretations benefit of interpretation is given to the subject [Express Mill v. Municipal Committee, Wardha, AIR 1958 SC 341]. If the Legislature fails to express itself clearly and the taxpayer escapes by not being brought with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w 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 saying that mandatory requirements of exemption clause should be interpreted strictly and the directory conditions of such exemption notification can be condoned if there is sufficient compliance with the main requirements. This, however, did not in any manner tinker with the view that an ambiguous exemption clause should be interpreted favouring the revenue. Here again this Court applied different tests when considering the ambiguity of the exemption notification which requires strict construction and after doing so at the stage of applying the notification, it came to the conclusion that one has to consider liberally. 28. With the above understanding the stage is now set to consider the core issue. In the event of ambiguity in an exemption notification, should the benefit of such ambiguity go to the subject/assessee or should such amb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ailing 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 interpreted in favour of the assessee. 41. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. 42. In Govind Saran Ganga Saran v. Commissioner of Sales Tax, 1985 Supp (SCC) 205, this Court pointed out three components of a taxing statute, namely subject of the tax; person liable to pay tax; and t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 made reference to the same earlier, repetition of the same is not necessary. From the above decisions, the following position of law would, therefore, clear. Exemptions from taxation have tendency to increase the burden on the other unexempted class of taxpayers. A person claiming exemption, therefore, has to establish that his case squarely falls within the exemption notification, and while doing so, a notification should be construed against the subject in case of ambiguity. 50. In Tata Iron & Steel Co. Ltd. v. State of Jharkhand, (2005) 4 SCC 272, which is another two-Judge Bench decision, this Court laid down that eligibility clause in relation to exemption notification must be given strict meaning and in para 44, it was further held - "The principle that in the event a provision of fiscal statute is obscure such construction which favours the assessee may be adopted, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 the factory of M/s. Haria Exports Ltd., a 100% EOU at Vapi and as such the impugned order is vitiated and fit to be set aside. It is further contended that Rule 5 of Cenvat Credit Rules does not require that the goods must be directly exported from the factory, even if the inputs are used in the manufacture of intermediate product and/or final products, which are wholly cleared for the export, which resulted into unutilised Modvat credit under the scheme. 6.1 The learned Counsel for the appellant also relies on the ruling of this Tribunal in the case of Manoj Handlooms v. Commissioner of Central Excise, Chennai - 2009 (240) E.L.T. 158 (Tri-Chennai), wherein it has been held by the learned Single Member, where also refund claim was on account of clearing the goods without payment of duty to an EOU, that the clearance to EOU have to be treated as export and refund of unutilized credit was allowed to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nity 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 appeal is dismissed and the impugned order is upheld. 9. It is noticed that the appellant have already paid back 50% of the refund as directed vide Stay Order No. S/253/2013/SMB/C-IV, dated 1-3-2013, the appellant is directed to deposit the balance refund received and report compliance to the respondent Commissioner of Central Excise, Thane-I within a period of 90 days from receipt of a copy of this order." 4.9 Further in case of Arrow Engineers, Tribunal held as follows: "6. This reasoning flows from the objective of the scheme of Cenvat credit to restrict levy of duties only to that value which has been added by the manufacturer to goods or by provider of services. In a tariff that is extensive, it is not possible to assign rates that accommodate stages of manufacture; the levy of duty to the extent of contribution to manufacture is facilitated by permitting debit of duty to the extent of liability contribu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arth 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.)] also relies upon the circular of the Central Board of Excise and Customs. The circular has been issued to allay the apprehensions of the trade that amendments to Rule 5 of Cenvat Credit Rules, 2004 and Rule 18 of Central Excise Rules, 2002 may alter any privilege of goods cleared to Special Economic Zone to the extent that such goods are in conformity with the definition of 'exports' in the Central Excise Act, 1944 and the rules framed therein. The benefit of Rule 18 of Central Excise Rules, 2002 and Rule 5 of Cenvat Credit Rules, 2004 are available. However, in the present instance, the impugned order has failed to demonstrate as such. 10. From the above, it is apparent that supplies to special economic zones are not exports except then viewed through the provisions of Special Economic Zones Act, 2005. The decisions of the Tribunal cited by Learned Counsel and support of the claim of the appellants to be exporters acknowledges the entitl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vat 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, in as much as, operation of the order in the case of Trigar Steel Engg. (supra), relied therein has been stayed by the Honble Bombay High Court as reported in 2011 (263) E.L.T. A 104 (Bom.)." The said decision, do not dwell on the issue independently but relies upon the decision in case of Apotex Pharmachem India Pvt Ltd, which was not the case of supply made to a project awarded under ICB, but was the case of supply made from one EOU to another EOU. The Tribunal thus relying on the decision of Hon'ble High Court in the case of Shilpa Copper which was on identical facts allowed the appeal partially. Since the decision in the case Om Metals Infra Projects Ltd., do not record any finding as to how the supplies made to a project awarded under ICB, is covered by the Rule 5 of the CENVAT Credit Rules, 2004, we find that the decision is sub-silento and cannot be a binding precedent. Even otherwise the bench deciding the case was not having the benefit of the decision of Hon'ble Apex Court i....