TMI Blog2018 (8) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... missed - decided against Revenue. - CEA.Nos. 49/2016 & 61-62/2016 C/w. CEA.Nos.3/2016 & 52-54/2016 - - - Dated:- 18-7-2018 - Dr. VINEET KOTHARI AND MRS. S. SUJATHA JJ. Mrs. Vanita K.R., Adv. for Appellant-Revenue. Mr. K.S. Ravishankar, Adv. for Respondent-Assessee. JUDGMENT The Revenue has filed these two appeals against the orders passed by the Customs, Excise Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, in Final Order Nos.21504-21507/2015, dated 26.6.2015/8.7.2015 (in CEA.Nos.3 52-54/2016) and in Final Order Nos.22028-22030/2015, dated 8.10.2015 (in CEA.Nos.49 61-62/2016). Since common question of law is involved in both these cases, we propose to dispose of both the appeals by common judgment as the issues involved are also common. 2. The facts are illustratively taken from CEA Nos.49 61-62/2016. The controversy revolves around the claim of refund by the assessee under CENVAT Credit Rules, 2004, for the period July 2008 to June 2009 (in CEA Nos.3 52-54/2016) and from July 2009 to February 2010 (in CEA Nos.49 61- 62/2016). The assessee is manufacturer of Battery Operated Cars i.e., Electric vehicles falling under Chapter 87 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax. 4. The learned counsel for the Revenue Mrs. Vanita K.R. also drew our attention towards the findings of the adjudicating authority who denied the said claim on the basis of Rule 11(3) of the aforesaid CENVAT Credit Rules, 2004, which provided for certain transitory provisions. The said Rule 11 of CENVAT Credit Rules, 2004, is also quoted below for ready reference. RULE 11. Transitional provision. (1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as they existed prior to the 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether cleared for home consumption or for export or for payment of service tax on any other output service, whether provided in India or exported. 5. On the other hand, leaned counsel for the respondent-assessee drew our attention to Rule 6(6) of the aforesaid Rules viz., CENVAT Credit Rules, 2004, and submitted that the provisions of sub-rules (1), (2), (3) (4) of Rule 6 shall not be applicable to the case of the assessee, in case the excisable goods were removed without payment of duty, where such goods are cleared for export under a Bond in terms of the provisions of Central Excise Rules, 2002. The said Rule 6, including sub-rule (6) of CENVAT Credit Rules, 2004, are also quoted below for ready reference. RULE-6 - Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted services, except in the circumstances mentioned in sub-rule (2). Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in Rule 12AA of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:- (a) While exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely:- (i) name, address and registration No. of the manufacturer of goods or provider of output service; (ii) date for which the option under this clause is exercised or proposed to be exercised; (iii) description of dutiable goods or taxable services; (iv) description of exempted goods or exempted services; (v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition; (b) the manufacturer of goods or the provider of output service shall, determine and pay, provisionally, for every month,- (i) the amount equivalent to CENVAT credit attributable to inputs used or in relation to manufacture of exempted goods, denoted as A; (ii) the amount of CENVAT credit attributable to inputs used for provision of exempted servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted goods manufactured and removed, during the financial year, and N denotes total CENVAT credit taken on input services during the financial year; (d) the manufacturer of goods or the provider of output service, shall pay an amount equal to the difference between the aggregate amount determined as per condition (c) and the aggregate amount determined and paid as per condition (b), on or before the 30th June of the succeeding financial year, where the amount determined as per condition (c) is more than the amount paid; (e) the manufacturer of goods or the provider of output service, shall, in addition to the amount short paid, be liable to pay interest at the rate of twenty-four percent. Per annum from the due date, i.e., 30th June till the date of payment, where the amount short- paid is not paid within the said due date; (f) Where the amount determined as per condition (c) is less than the amount determined and paid as per condition (b), the said manufacturer of goods are the provider of output service may adjust the excess amount on his own, by taking credit of such amount. (g) the manufacturer of goods or the provider of output service shall intimate to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 5th day of the following month except for the month of March, when such payment shall be made on or before the 31st day of the month of March. Explanation III. If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rule (3) or as the case may be sub-rule (3A), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken. (4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year. (5) Notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denying the refund inter alia on the ground that there was NIL balance in the credit of the CENVAT account of the assessee as on 1.3.2008. He further submitted that refund of CENVAT credit is claimed by the assessee of CENVAT Credit which got accumulated only after 1.3.2008 on the inputs procured by the assessee and used in the manufacture of Battery Operated Cars in question, which were exported under Bond and Letter of Undertakings in terms of Rule 19 of Central Excise Rules, 2002. The said Rule 19 is also quoted below for ready reference. Rule 19. Export without payment of duty.- (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner. (2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner. (3) The export under sub-rule (1) of sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term excisable goods instead of exempted goods is that the term `exempted goods may not cover the dutiable goods which are exported under bond. Therefore, in order to widen and cover both dutiable and exempted goods exported under bond, Rule 6(6) of Cenvat Credit Rules, 2004 uses the expression excisable goods . As an illustration, if a car which is dutiable is exported under bond without payment of duty there may be doubt as to whether credit on the inputs will be available, since the car is cleared without payment of duty under Rule 6(5) of Cenvat Credit Rules, 2002. It could be argued that it covers only the exempted goods exported and not dutiable goods exported. In order to cover such a situation also, Rule 6(6) of Cenvat Credit Rules, 2004, used the expression `excisable goods which is wider to include both dutiable as well as exempted goods. 11. Similarly, the Himachal Pradesh High Court in the case of Commissioner of Central Excise vs- Drish Shoes Ltd., {2010 (254) E.L.T. 417 (H.P)}, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted. Question No.1 is answered accordingly. 21. As regards question No.2, it is clear from a bare reading of Rule 5 of CENVAT Credit Rules, 2004 that a manufacturer, who exports the final products which are exempt from duty, can claim refund of CENVAT. So, this question is also answered against the appellant. 12. The SLP against the aforesaid decision of the Himachal Pradesh High Court Judgment came to be dismissed by the Hon ble Supreme Court on 12th July 2016, in Civil Appeal No.2817/2012 (Commissioner of Central Excise, Chandigarh vs- M/s.Drish Shoes Ltd.,), following their earlier similar dismissal of SLP against the decision of the Bombay High Court in the case of Union of India vs- Sharp Menthol India Ltd., {2011 (270) E.L.T. 212 (Bom.)}, on 6.4.2011. 13. A similar view was also expressed by the Division Bench of Madras High Court in the case of Commissioner of C.Ex., Chennai-III vs- Same Duetz Fahr India (P) Ltd., {2017 (6) G.S.T.L. 453 (Mad.)}, the relevant portion of which is quoted below for ready reference. 13. It is no one s case that the goods manufactured by the assessee were not excisable. Though the goods were excisable, the only re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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