2010 (11) TMI 323 - AT - Central Excise

Refund - Accumulated CENVAT credit - Rule of 5 of Central Excise Rules read with Section 11A of the Central Excise Act 1944 - the Respondents are exporting their total production barring trimmings of paper and some waste and scrap. It goes to show that they were not able to utilize the credit on inputs used in the manufacture of final products for export. The lower Adjudicating Authority has clearly brought out in para 9 of his order that the refund claim is allowed on a quarterly basis. - Held that there is no condition to establish input/output correlation in the Rule 5A ibid or notification No. 5/2006-C.E. (N.T.) dated 14-3-2006 issued thereunder - Hence do not find any infirmity in the concurrent findings of the lower authorities - The department s appeal is devoid of merits - The appeal is dismissed - decided in favour of asseessee.

Summary

Issues:
1. Appeal against Commissioner (Appeals) order upholding refund sanction under Central Excise Rules.
2. Interpretation of conditions for refund under Notification No. 5/2006-C.E. (N.T.).
3. Determination of input/output correlation for refund eligibility.

Analysis:

1. The appeal before the Appellate Tribunal CESTAT, Mumbai was filed by the department against the Commissioner (Appeals) order which upheld the lower adjudicating authority's decision to sanction a refund to the Respondent under Rule 5 of Central Excise Rules read with Section 11A of the Central Excise Act, 1944. The Respondent, engaged in manufacturing copier paper for export, had filed a refund claim for unutilized CENVAT credit on inputs.

2. The main contention raised by the Revenue was that the lower authorities did not adhere to the conditions specified in Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006, which allowed refunds only when a manufacturer could not utilize input credit against exported goods. The Revenue argued that without establishing input/output correlation, the CENVAT credit for exported goods should not be granted, which was not addressed by the lower authority.

3. Upon reviewing the records and submissions, the Tribunal found that the Respondents were indeed exporting almost all their final products, indicating their inability to utilize input credit for export production. The lower Adjudicating Authority had clarified that the refund claim was allowed on a quarterly basis, and any claims beyond the prescribed time limit were not granted. The Tribunal noted that there was no requirement to establish input/output correlation in the relevant Rule or notification. Consequently, the Tribunal upheld the Commissioner (Appeals) decision, dismissing the department's appeal for lack of merit.

In conclusion, the Appellate Tribunal CESTAT, Mumbai affirmed the Commissioner (Appeals) order sanctioning the refund to the Respondent under Central Excise Rules, rejecting the department's appeal based on the lack of established input/output correlation and the Respondent's inability to utilize input credit for exported goods as per the conditions specified in the relevant notification.