2018 (8) TMI 611 - AT - Central Excise

100% EOU - Refund of CENVAT credit - Rule 5 of CENVAT Credit Rules r/w N/N. 27/2012-CE dated 18.06.2012 - denial of refund on the ground of time limitation - Held that - Refund of CENVAT credit is available as per Rule 5 of the CENVAT Credit Rules 2004. Subject to procedure safeguards conditions and limitations as may be specified by the Board by notification in the official gazette. Thus it is clear that eligibility of refund under the Rules is subject to conditions which may be entitled by the Board. The notification which is issued by the Government or the Board is a subordinate Legislation. There is a well established mechanism for reviewing whether or not the conditions safeguards procedures and limitations imposed by the notifications are reasonable and are within the powers given to the Government by the Board. Hence powers of framing rules or issuing notifications are given to the Government which is answerable to the Parliament. It is also well known that if the Parliament feels that the notifications required amendment they direct the Government to do so. This power of deciding or amending or revising the conditions safeguards limitations etc is not given to either Quasi Judicial Authorities or to the officers. The learned first appellate authority has clearly erred in sanctioning the refund taking a larger view of what is good to promote exports etc. and such perceived equity has no place in interpretation of a fiscal statute and the notification must be strictly construed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Eligibility for refund of CENVAT credit under Rule 5 of CENVAT Credit Rules r/w Notification No.27/2012-CE.
2. Rejection of refund claim on grounds of lack of credit balance, failure to debit claimed amount, and filing beyond prescribed time limit.
3. Interpretation of procedural vs. substantive conditions in granting refunds.
4. Dispute over reversal of irregularly availed CENVAT credit and fulfillment of conditions for refund claim.
5. Compliance with conditions for filing refund claims under the notification.

Analysis:

1. The issue pertains to the eligibility of the respondents, a 100% EOU, for a refund of CENVAT credit under Rule 5 of the CENVAT Credit Rules along with Notification No.27/2012-CE. The Original Authority rejected the refund claim citing various grounds, including the absence of credit balance at the time of filing the claim.

2. The first appellate authority allowed the appeal, emphasizing that the time limit prescribed for filing refund claims is for convenience and does not impact eligibility for refunds. The authority highlighted the importance of refunding accumulated credit to maintain competitive prices in the international market, citing the judgment in the case of Mangalore Chemicals and Fertilizers Ltd.

3. The Revenue challenged the appellate authority's decision, arguing that the appellant was not entitled to a refund based on substantive grounds, such as irregularly availed CENVAT credit and failure to fulfill conditions stipulated in the notification.

4. The Revenue contended that the appellant's refund claim was not in compliance with the conditions outlined in the notification, particularly regarding the time limit for filing refund applications. The Revenue sought to set aside the Order-in-Appeal and reject the refund application.

5. The Tribunal observed that the first appellate authority erred in relaxing the conditions specified in the notification and allowing the refund based on perceived equity. The Tribunal emphasized the need to strictly construe fiscal statutes and notifications, setting aside the Order-in-Appeal and disallowing the refund claim.

In conclusion, the Tribunal allowed the appeal by the Revenue, setting aside the Order-in-Appeal and denying the refund claim for CENVAT credit, emphasizing the strict interpretation of fiscal statutes and conditions outlined in notifications.