Good Year India Limited vs Cce-Delhi-Iv

[Arising out of Order-in-Appeal No. 28/CE/Appl/DLH-IV/2010 dated 30/03/2010 passed by the Commissioner of Central Excise (Appeals), Delhi-IV, New C.G.O. Complex, NH-IV, Faridabad-121001]

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

Good Year India Limited Appellant

Vs.

CCE-DELHI-IV Respondent

Appearance: Sh. B.L. Narsimhan, Advocate for the appellant

Sh. Pramod Kumar, JCDR for the respondent

Coram: Honble Sh. Rakesh Kumar, Member (Judicial)

Honble Sh. S.K. Mohanty, Member (Technical)

Final Order NO. 50523/2015

Per: Rakesh Kumar

The facts leading to filing of this appeal are, in brief, as under:

1.1 The appellants are manufacture of tyres for which one of the inputs is nylon tyre cord fabrics. While the nylon tyre cord fabrics attract Basic Excise Duty as well as Additional Excise Duty leviable under Additional Duty of Excise (Goods of Special Importance) Act, 1957 [hereinafter referred to as AED (GSI)], the final product  tyre attracts only the basic excise duty and Special Excise Duty and there is no AED (GSI) on the tyres. The period of dispute in this case is from August, 1997 to March, 2000. During this period, the appellant had taken CENVAT Credit of Basic Excise Duty and AED (GSI) paid in respect of nylon tyre cord fabrics. However, since during period prior to 1/4/2000, AED (GSI) credit could be utilized only for payment of AED (GSI) on the final product and could not be utilized for payment of Basic Excise Duty or Special Excise Duty, the appellant had accumulated AED (GSI) credit in their CENVAT Credit account. During this period, some of the consignments of tyres had been cleared for export under bond without payment of duty and the AED (GSI) credit of Rs. 18,90,389/- attributable to the inputs used in the manufacture of such tyres which had been exported under bond was refundable under Rule 57F (13) of the Central Excise Rules, 1944 as the same could not be utilized for payment of duty on clearances for home consumption.

The appellant during 1998-99 filed claims for refund of amount of Rs. 18,90,389/- which represented the AED (GSI) credit in respect of the inputs which had been used in the manufacture for tyres exported under bond and these claims had been filed under Rule 57F (13) of the Central Excise Rules, 1944 read with notification no. 85/87CE(NT) dated 1/3/1987. The Assistant Commissioner by two separate orders dated 6/9/2000 and 6/12/2000 rejected the refund claims totalling Rs.18,90,389/-. The rejection of the claims was on the ground that there is no AED (GSI) leviable on the final product and also some portion of the refund claim is time barred. On appeal being filed to Commissioner (appeals) against these orders of the Assistant Commissioner, the Commissioner (appeals) vide order-in-appeal dated 31/12/2002 upheld the Assistant Commissioners orders. The appellants filed the appeal to the Tribunal against the Commissioner (appeals) orders dated 31/12/2002. However, while the appellants appeals were pending before the Tribunal, the Government amended CENVAT Credit Rules, 2002 in March, 2003 and by this amendment, the utilization of AED (GSI) credit for payment of Basic Excise Duty or Special Excise Duty on the final product was allowed.

The appellant at that time had huge accumulated AED (GSI) credit, out of which the credit of Rs. 8,71,12,812/- pertained to the period prior to 1/4/2000. During March 2003 and April, 2003, the entire AED (GSI) credit, including AED (GSI) credit pertaining to the period prior to 1/4/2000, was utilized for payment of Basic Excise Duty and Special Excise Duty on the final product. In view of this, the appellant made applications before the Tribunal for withdrawal of the appeals filed against Commissioner (appeals) order dated 31/12/2012 and the same were allowed to be withdrawn.

1.2. Subsequently, the Government in the year, 2004 by section 88 of the Finance Act, 2004, amended the CENVAT Credit Rules, 2002 with retrospective effect so as to restrict the utilization of AED (GSI) credit for payment of Basic Excise Duty and Special Excise Duty on the final product only to that credit of AED (GSI) which had accrued after 1/4/2000 and not the AED (GSI) accrued prior to 1/4/2000. The Finance Act, 2004 was enacted in September, 2004. In view of this, the utilization of AED (GSI) credit of Rs. 8,71,12,812/- pertaining to the period prior to 1/4/2000 became contrary to the provisions of the CENVAT Credit Rules, 2002 as amended retrospectively by section 88 of the Finance Act, 2004 and accordingly, the Appellant deposited an amount of Rs. 8,49,74,3000/- in December, 2004. The balance amount of Rs. 21,38,512/- was not deposited/reversed on the ground that the same represented the AED (GSI) credit in respect of the tyre cord fabrics which had been used for manufacture of tyres exported under bond without payment of duty and according to the appellant, they were entitled to utilize this credit for payment of duty or if this could not be so utilized, the same would be eligible for its cash refund under Rule 57F (13) of the Central Excise Rules, 1944. Accordingly, the appellant filed the refund claims for an amount of Rs. 18,90,389/- once again on 31/8/2005. These refund claims were for cash refund by the AED (GSI) credit pertaining to the period prior to 1/4/2000 which had accrued in respect of the inputs used in the manufacture of the tyres under bond without payment of duty. These refund claims were rejected by the Assistant Commissioner vide Order-in-Original dated 4/2/2009. The refund claims were rejected on the ground that the appellants have already utilized this credit for payment of duty on the final product cleared for home consumption. This order of the Assistant Commissioner was upheld by the Commissioner (appeals) vide order-in-appeal dated 30/03/2010 against which this appeal has been filed.

3. Heard both sides.

4. Sh. B.L. Narsimhan, Advocate, ld. Counsel for the appellant, pleaded that though during the period of dispute, there was no AED (GSI) on the final product  tyres, while the tyre cord fabrics used in the manufacture of tyres had suffered in addition to Basic Excise Duty, AED (GSI) also, in terms of the Boards circular no. 267/11/2003CX8 dated 12/3/2003, the appellants were eligible for AED (GSI) credit and when any tyre cord fabrics had been used in the manufacture of tyres which had been exported under bond without payment of duty, AED (GSI) credit attributable to such tyre cord fabrics would be refundable under Rule 5 of the CENVAT Credit, 2002, regardless of the fact that AED (GSI) is not leviable on the final product; that in view of this circular of the Board, the appellant would be entitled for the cash refund of the AED (GSI) credit attributable to the inputs used in the manufacture of tyres which had been exported under bond without payment of duty, that lower authorities have rejected the refund claim only on the ground that the credit had already been utilized by the appellant for payment of Basic Excise Duty and Special Excise Duty on the domestic clearances; that since the Tribunal vide final order no. 50178/2015 dated 14/1/2015 has now held that the AED (GSI) credit accrued during period prior to 1/4/2000 could not be utilized for payment of Basic Excise Duty and Special Excise Duty in view of the provisions of the Section 88 of the Finance Act, 2004 and as such, the utilization of such credit to the extent of Rs. 8,71,12,812/- by the appellant for payment of Basic Excise Duty and Special Excise Duty is wrong and in view of this order of the Tribunal, the appellant would be required to reverse the balance amount of the credit of Rs. 21,38,512/- also, the cash refund of Rs. 18,90,389/- under Rule 57F (13) of Central Excise Act, 1944 should not be denied as this cash refund is admissible to them in terms of the Boards Circular dated 12/3/2003.

He also pleaded that there is no question of limitation, as while the notification no. 85/87CE mentions that the claims are to be filed within the period specified in section 11B, neither this notification nor section 11B defines the relevant date for the purpose of such cash refunds of the accumulated CENVAT Credit under Rule 57F (3) of Central Excise Rules, 1944/Rule 5 of the CENVAT Credit Rules 2001/2002 and that Honble Madhya Pradesh High Court in the case of STI India Limited Vs. CCE-Indore reported in 2009 (236) ELT 248 (MP) has held that no limitation period is applicable in respect of the cash refunds under Rule 57F(13) of Central Excise Rule, 1944. He, therefore, pleaded that the impugned order upholding the rejection of the refund claim is not correct. He accordingly, pleaded that while the appellant undertake to reverse AED (GSI) Credit of Rs. 21,38,512/- in accordance with the Tribunals final order no. 50178/2015 dated 14/1/2015 in their CENVAT Credit Account, out of this amount, they must be allowed the cash refund of Rs. 18,90,389/- in terms of Rule 57F (13)of the Central Excise Rules.

5. Sh. M.S. Negi, ld. DR, defended the impugned order and reiterating the findings of the Commissioner (appeals) in the impugned order pleaded that since the appellant have already utilized the entire amount of AED (GSI) Credit for payment of Duty of Basic Excise and Special Excise Duty, there is no question of its cash refund under Rule 57F (13). He also pleaded that the refund claim is time barred and in this regard he cited judgment of Honble Madaras High Court in the case of CCE-Coimbatore Vs. GTN Engineering (I) Limited reported in 2012 (281) ELT 185 (MAD.) wherein the Honble High Court held that though Rule 5 of the CENVAT Credit Rules, 2004 does not prescribe any relevant date, it has to be the date on which the final product are cleared for export and if any other conclusion is arrived, it will result in disentitling any person to claim of refund of CENVAT Credit.

6. We have considered the submission from both the sides and perused the records. The refund claims under Rule 57F (13) of Central Excise Rules, 1944 read with notification no. 85/87 CE(NT) pertain to the period prior to 1/4/2000 and these refund claims are of the accumulated AED (GSI) credit in respect of the inputs which had been used in the manufacture of tyres exported under bond without payment of duty. There is no dispute that though during that period, there was no AED (GSI) on the tyres, the appellant in view of the Boards Circular dated 12/3/2003 would be eligible for cash refund of the AED (GSI) credit. In view of the amendment of CENVAT Credit Rules, 2002 in March, 2003 they had utilized the entire amount of AED (GSI) Credit of Rs. 8,71,12,812/- accrued prior to 1/4/2000 for payment of Basic Excise Duty and Special Excise Duty on tyre and subsequently when the utilization of AED (GSI) credit for payment of Basic Excise Duty and Special Excise Duty was restricted by section 88 of the Finance Act, 2004, to that AED (GSI) Credit only which had accrued w.e.f. 1/4/2000, they, out of the total pre-1/4/2000 credit of Rs. 8,71,12,812/- utilized earlier, paid back an amount of Rs. 8,49,74,300/- and thus, the amount of Rs. 21,38,512/- still remains utilized for payment of Basic Excise Duty and Special Excise Duty.

The Tribunal vide final order no. 50170/2012 dated 14/1/2015 has finally decided that in view of the provisions of section 88 of the Finance Act, 2004, the appellants were not entitled to utilize the AED (GSI) credit of Rs. 8,71,12,812/- accrued prior to 1/4/2000 for payment of Basic Excise Duty and Special Excise Duty and this utilization is contrary to the provisions of the law. The appellant now have undertaken to reverse the balance amount of credit of Rs. 21,38,512/-. In our view, if the appellant reverse this credit, out of this amount, they would be eligible for cash refund of Rs. 18,90,389/-as the same is in respect of the inputs which had been utilized for manufacture of tyres which had been exported under bond without payment of duty. As regards, the limitation, according to the Department a part of the claim is time barred. However, on this point, we find that Honble Madhya Pradesh High Court in the case of STI India Limited Vs. CCE-Indore reported in 2009 (236) ELT 248 (MP) has held that strict law of limitation provided in section 11B of Central Excise Act, 1944 would not apply to the refund claim pursuant to the notification issued under Rule 57F.

This judgment of the Honble Madhya Pradesh High Court had BEEN followed by this Tribunal in the case of Deepak Spinners Limited Vs. CCE-Indore reported in 302 (ELT) 132. Moreover, while the notification no. 85/97 CE(NT) provides that the claim for cash refund under Rule 57F (13) is to be filed within the limitation period prescribed under section 11B and section 11B prescribes the limitation period which is to be counted from the relevant date as defined in that section, neither this notification nor section 11B gives the definition of the relevant date for the purpose of cash refund under Rule 57F (13). While cash refund under Rule 57F (13) becomes admissible only after export of the goods having been made under bond and when the assessee cannot utilize the CENVAT Credit attributable to the inputs used in the manufacture of the goods cleared for export under bond, for payment of duty on the clearances for home consumption, the Rule does not prescribe as to how long the manufacture exporter is to wait for utilization of the accumulated credit for payment of duty on the clearances for home consumption.

Therefore, it may not be correct to treat the date of clearance of the goods for export as the relevant date In view of this, following the judgment of Honble Madhya Pradesh High Court in the case of STI India Limited Vs. CCE-Indore reported in 2009 (236) ELT 248 (MP) (supra) we hold that the refund claims have to be treated as not hit by limitation. In view of the above discussion, the impugned order is set aside and the appeal is allowed. The appellant would be eligible for cash refund under section 57F (13) only if in terms of the Tribunals final order dated 14/1/2015 they reverse the AED (GSI) Credit of Rs. 21,38,512/- in their CENVAT Credit Account.

S.K. Mohanty Rakesh Kumar

Member (Judicial) Member (Technical)

Ritu