M/S Nash Industries vs Commissioner Of Central Excise And ...

[Arising out of Order-in-Appeal No. 141/2009 dated 30/10/2009 passed by the Commissioner of Customs (Appeals), Bangalore]

For approval and signature:

HONBLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should 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? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

M/s NASH INDUSTRIES No. .236-237/2, 8TH MAIN ROAD, 3RD PHASE, PEENYA INDUSTIAL AREA, BANGALORE-560058. Appellant(s) Versus Commissioner of Central Excise and Service Tax, BANGALORE-III PB.NO.5400, QUEENS ROAD, CENTRAL REVENUES BUILDING, BANGALORE  560001. Respondent(s)

Appearance:

HIRAGANGE & ASSOCIATES #1010, 1st floor(Above Corp.Bank) 26th Main, 4th T Block, Jayanagar, BANGALORE - 560041 For the Appellant Mr. Pakshi Rajan, A. R. For the Respondent

Date of Hearing: 26/06/2015 Date of Decision: .. CORAM :

HONBLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. 21524 / 2015

The appellants are 100% E.O.U. and are manufacturers and exporters of sheet metal pressed components falling under Chapter 85 of the First Schedule of Central Excise Tariff Act. The dispute in the present appeal relates to refund of unutilized Cenvat credit of duty paid on inputs and service tax paid on input services used in the manufacture of final products, which were cleared for export during the period October 2007 to December 2007. The refund claim to the extent of Rs. 13,61,014/- stands denied by the lower authorities on the following grounds :-

(I) Disallowed refund of credit of Rs. 341/- pertaining to courier services treating it as ineligible as it is not related to manufacture.

(ii) Refund of credit of Rs. 11,34,813/- disallowed as the same is not eligible for having taken credit prior to payment of service tax in accordance with Rule 4 (7) of Cenvat Credit Rules, 2004.

(iii) Disallowed refund of Credit of Rs. 2,26,201/- as it pertaining to supplies made to another EOU and not a direct export.

2. As regards availing of credit prior to the actual payment of service tax, in terms of Rule 4 (7) of Cenvat Credit Rules, learned Chartered Accountant appearing for the appellants submits that even if the credit was availed before the actual payment of service tax, the same would not debar the appellant from claiming the refund subsequently, inasmuch as the same would be available subsequent to payment of service tax. For the above proposition, they have relied upon the Tribunals decision in the case of J.K. Sugar Ltd. Vs. Commissioner of Central Excise, Meerut-II [2012 (26) S.T.R. 391 (Tri.-Del.)].

3. I find that the appellants are entitled to refund of the accumulated unutilized Cenvat credit in terms of Notification No. 05/06 CE NT dated 14.3.2006 issued under Rule 5 of the Cenvat Credit Rules, 2004. The lower authorities have disallowed the refund of the said credit on the sole ground that the credit was availed before service tax was actually paid. However, it is not clear as to when the credit was availed and when the service tax was paid. If the service tax stands paid prior to the claim of refund, the said fact of availing the credit before actual payment will not make much of difference, inasmuch as the credit availed during the period prior to actual payment of service tax would have remained in their Cenvat credit account only. However, in the absence of any clarity on the fact that whether the said service tax was actually paid prior to claim of the refund, I deem it fit to set aside the impugned order and remand the issue to the original adjudicating authority for verification of the above fact. I also note that the refund stands denied on the said preliminary fact without factual verification. As the matter is being remanded, the original adjudicating authority would also verify the appellants claim, based upon the documentary evidence.

4. As regards the denial of refund claim on the ground that the appellant had not physically exported the goods but only supplied the goods to the other 100% E.O.U., I find that the issue is covered by various decisions. The Honble High Court of Gujarat in the case of Commissioner of Central Excise Vs. Shilpa Copper Wire Industries [2011 (269) E.L.T. 17 (Guj.)] had held that clearances to other 100% E.O.U. have to be treated as physical exports, thus making the assessee entitled to the refund of unutilized Cenvat credit in terms of Rule 5 of Cenvat Criedt Rules 2004. To the similar effect is the another decision of the Honble High Court in the case of Commissioner of Central Excise and Customs vs. NBM Industries [2012 (276) E.L.T. 9 (Guj.)], which held that the appellants claim for refund cannot be denied on the said ground. However, as the lower authorities has not examined the appellants claim vis-`-vis the documentary evidence I direct them to do so, for which purpose I remand the issue.

5. As the matter is being remanded, the refund of Rs. 341/- would also be examined afresh.

6. In view of the foregoing, the impugned order is set aside and the matter is remanded to the original adjudicating authority for fresh decision in the light of the observations made supra.

(Pronounced in the open court on )

(ARCHANA WADHWA) JUDICIAL MEMBER

/vc/