TMI Blog2018 (8) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with Rule 5 of CCR and Notifications issued under the Act and any restrictions made by legislature in this Rule on any category of exports etc. are not contrary to the said Section. In the instant case there is no conflict between the primary statute and the delegated provisions as the primary statute has made the provision of allowing the refunds as per Rule 5 of CCR and Notification issued under the Act and any restriction made in the said Rules on any category of exports imposed by legislature is in consonance with the Section 11B of the Act. The specific inclusion of clause (1A) in Rule 5 bid clearly shows the legislative intent to allow refund facility to actual physical exports. As the right to refund for exports other than physical exports did not accrue under law, which in the impugned period is permitted for physical exports only, there is no conflict between Rule 3, 4 and 5 of Cenvat Credit Rules. Appeal dismissed - decided against appellant. - Appeal No. E/60839 & 60838/2017 - Final Order No. 62595-62596/2018 - Dated:- 10-8-2018 - Hon ble Mr.Devender Singh, Member ( Technical ) For the Appellant : Shri Jagmohan Bansal, Advocate Present Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it which has been permitted vis-a-vis inputs cannot be curtailed/denied; (ii) the provisions of Rule 3,4 5 of CCR and Section 11B and Notification No.12/12 are required to be interpreted harmoniously. He contended that Rule 5 makes Cenvat credit scheme otiose. In support of his contentions, he relied upon the following judgments:- (i) Union of India vs. Uttam Steel Ltd.-2015 (319) ELT 598 (SC) (ii) Lucid Colloids Ltd. vs. Union of India-2006 (200) ELT 377 (Raj.) (iii) Malaysian Airlines vs. Union of India-2010 (262) ELT 192 (Bom) (iv) British Airways-2013 (282) ELT (G.O.I.) (v) Commissioner of Income Tax vs. Chemplast Sanmar Ltd.-2009 (314) ITR 231 (vi) Zenith Spinners vs. Union of India-2015 (326) ELT 97 (Guj.) (vii) Union of India vs. Zenith Spinners-2015 (326) ELT 23 (SC.) (viii) Cappithan Agencies s. CC, Chennai-VIII-2016 (336) ELT 524 (Mad) (ix) Horizon Ferror Alloys Pvt.Ltd. vs. Union of India-2016 (340) ELT 27 (P H) (x) Bharat Earth Movers Ltd. vs. CC, Madras-I-2001 (129) ELT 580 (Mad) (xi) Union of India vs. Suksha International Nutan GAms anr- 1989 (39) ELT 503 (SC) (xii) Godawat Pan Masala Products I.P.Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified by the Board by notification in the Official Gazette : (Export turnover of goods + Refund amount = Export turnover of services) Net CENVAT Total turnover credit Where, - (A) Refund amount means the maximum refund that is admissible; (B) Net CENVAT credit means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider reduced by the amount reversed in terms of sub-rule (5C) of rule 3, during the relevant period; (C) Export turnover of goods means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking; (D) Export turnover of services means the value of the export service calculated in the following manner, namely :- Export turnover of services = payments received during the relevant period for export services + export services whose provision has been completed for which payment had been received in advance in any period prior to the relevant period - advances received for export services for which the provision of service has not been comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Central Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - (a) ------------------------------------ (b) ---------------------------------- (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) -------------------------------- 8. The first appellate authority has rejected the claim for refund after 1.3.2015 on the basis of clause (1A) inserted in Explanation 1 to Rule 5 of the CCR vide Notification NO.6/15-CE dt.1.3.2015 by holding that the goods exported must be taken out of India to a place outside India and refund for export of goods defined under Foreign Trade Policy cannot be considered as export under amended Rule 5 of Cenvat Credit Rules. In other words, after insertion of clause A, refund of credit is admissible only for goods which have been physically exported out of India. 9. First contention of the appellant is that Rule 5 of CCR deals with only physical export of the goods and does not mandate that refund would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of credit on inputs is enabled by provision to Section 11B (2) which reads as under:- (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act. A plain reading of the above provision shows that refund of unutilized credit on inputs is governed by rules made or any notification issued under Central Excise Act, 1944. Accordingly, Rules 5,5A and 5B of CCR, which are the only rules made for such refunds are in complete harmony with Section 11B (2) (c) of the Act since CCR, 2004 have been made under Section 37 of Central Excise Act, 1944. Thus, there is no contradiction or conflict between Section 11B and Rule 5 of Cenvat Credit Rules. As a result, the contention that Rule 5 is supplanting the Section 11B is patently fallacious. It is therefore clear that Section 11B allows refunds in accordance with Rule 5 of CCR and Notifications issued under the Act and any restrictions made by legislature in this Rule on any category of exports etc. are not contrary to the said Section. 10. Another contention of the appellant is that Section 11B requires only availing of credit and it does not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and the notification should be interpreted harmoniously because the said Rule makes other provisions otiose or redundant. In this regard, the appellant have relied upon the judgment of the Hon ble Supreme Court in the case of Election Commission of India (supra) and British Airways vs. Union of India (supra). Although these judgments are not in the specific context of Cenvat Credit Rules, 2004, the common principle in these 2 judgments is that effort should be made to interpret obviously repugnant provisions of statute so that each provision will have its play and, in the event of conflict harmonious construction should be given. As elaborated hereinabove, there is no contradiction between the Section 11B and Rule 5 of CCR. I also find that there is no contradiction or between the Rules 3, 4, and 5 of the Cenvat Credit Rules. Rules 3 and 4 deal with duties of which credit can taken and condition for allowing credit and its utilization. The provisions relating to the refund of credit for different categories in Rule 5A and Rule 5B enumerated and elaborate the purpose for and categories to which refund is permissible. The contention of the appellant that there is conflict betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means actual compliance in respect to the substance essential to every reasonable objective of the statute and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Refunds and Exemption are Governed by Rule of Strict Compliance 5.8 Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the legislature but cannot set at naught legislative judgment because such course would be subversive of constitutional harmony [See : Union of India Anr. v. Deokinandan Aggarwal]. No person has vested right in any course of procedure 5.11 No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner laid down by law. He has no right than to proceed according to the mandate of the statute governing the subject. Claim of refund is not a matter of right unless vested by law. That would depend upon the object of the statute and eligibility. The purpose for which law has been made and its nature, the intention of the legislature in making the provision, the relation of the particular provision to other provisions dealing with the subject including the language of the provision are considerable factors in arriving at the conclusion whether a particular claim is in accordance with law. No injustice or hardship can be raised as plea to claim refund in absence of statutory mandate in that behalf and no equity or good conscience influence fiscal courts without the same being embedded to the statutory provisions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Detailed reading of the above Judgments, leads in to the fact that wherever the assessee was unable to utilize the credit on account of objection raised by the Department or actions taken by them by way of initiation of proceedings or paid duty out of modvat account at the Department s insistence, and for that reason, he had to pay duty in cash or out of the PLA, they would be entitled to refund of that credit in cash, on the dispute being ultimately settled in their favour. In the decisions holding that such refund in cash is not possible, it has been observed that there is no provision allowing refund of such credit in cash. However, we are not in agreement with the above proposition for the simple reason that there is also express no bar in the Modvat Rules to that extent We have to keep in mind that it is not the refund of unutilized credit, but the credit which has been used for payment of duty at the insistence of the revenue or has been reversed because the Department was of the view that the same is not available for utilization. This is a simple and basic principle of equity, justice and good conscience. Had the Department not prevented the assessee from utilizing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not expressly permitted to be refunded. In absence of express provision to grant refund, that is difficult to entertain except in the case of export. There cannot be presumption that in the absence of debarment to make refund in other cases that is permissible. Refund results in outflow from treasury, which needs sanction of law and an order of refund for such purpose is sine qua non. Law has only recognized the event of export of goods for refund of Modvat credit as has been rightly pleaded by Revenue and present reference is neither the case of otherwise due of the refund nor the case of exported goods. Similarly absence of express grant in statute does not imply ipso facto entitlement to refund. So also absence of express grant is an implied bar for refund. When right to refund does not accrue under law, claim thereof is inconceivable. Therefore, present reference is to be answered negatively and in favour of Revenue since refund of unutilized credit is only permissible in case of export of goods and for no other reason whatsoever that may be. As has been stated earlier that equity, justice and good conscience are the guiding factors for Civil Courts, no fiscal Courts are gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been held that in interpreting taxing statute, equitable considerations are entirely out of place nor can taxing statutes be interpreted on any presumptions or assumptions. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency. [Ref : Sales Tax Commissioner v. Modi Sugar Mills, AIR 1961 SC 1047, p. 105, CIT v. M. G. Mills - AIR 1971 SC 2434, p. 2435]. 14. Ld. Advocate also relied on the judgment of Hon ble Bombay High Court in the case of Malaysian Airlines (supra) to argue that delegated legislation has to be read in the context of primary statute under which it is made and in the case of any conflict primary legislation prevails. In the said case, the provision relating to the penalty in Section 38(3) of the Finance Act, 1979 providing for penalty on carrier being not less than one fifth and extending three times of the amount of tax not paid while in Rule 11 of Foreign Travels Tax Rules, 1979 provision was made for penalty in such cases not to exceed ₹ 5,000/-. In the circumstance, Rule 11 was held to be contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11B. Since there was conflict between said Rule and the Section, the Hon ble Supreme Court held that subordinate legislation cannot dispense with requirement of Section 11B. In the present case, however, such conflict as was seen in the case of Uttam Steel (supra) is non-existent. The provision in section 11B empowers refund to be made in accordance with Rule and notification and no provision of Rule 5 is in conflict with Section 11B. Hence, the ratio of the Uttam Steel (supra) is not applicable to the facts of this case. 17. The appellant have also relied upon the judgment of Hon ble Madras High Court in the case of Commissioner of Income Tax vs. Chemplast Sanmar Ltd. (supra) to argue that if Rule acts beyond what section contemplates, Rule must yield to the statute. As already discussed, there is no conflict or contradiction between the Rule 5 ibid and Section 11B and primary statute enables the refund as per Rules. Hence, the said judgment is not applicable to the facts of this case. 18. The appellant have also relied upon the judgment of Hon ble Gujarat High Court in the case of Zenith Spinners (supra). In the said case, the appellant was availing the scheme under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable to the facts of the present case. As held in the case of Steel Strips (supra), the legislature in its wisdom has restricted the refund in cash to certain select categories and the right of unutilized Cenvat Credit is not a matter of vested right. 21. The appellants have also relied on the judgment of UOI vs. Suksha International Nutan Gems Anrs. (supra) wherein it was held that the interpretation unduly restricting the scope of a beneficial provision is to be avoided so that it may not take away with on hand what the policy gives with the other. In this case, the dispute was about certain incentives to Export Houses and there was dispute in the interpretation of clause 4 and 7 of para 185 of the Import-Export Policy, 1982-83. Hon ble Apex Court observed that in their plain wording, there were certain constitutional difficulties in clauses 4 and 7 and hence there was need for harmonious construction. In the present case, I find that there is no ambiguity in the wording of the Rule 5 of CCR or in Section 11B nor is there any contradiction between the two. Intent of the legislature is clear from the plain wording of the Rule. Hence, the ratio of the said case is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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