TMI Blog2022 (2) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... even necessary to now quash and set aside the order passed by the Joint Commissioner (Appeals), as, in fact, the matter should go back to the Assistant Commissioner for the purpose of determination of the refund claim in accordance with the principle / formula, as provided and explained in the reply. But, at the same time, it would be necessary to quash and set aside the order passed by the Joint Commissioner dated 19th July 2021 - Appeal allowed in part. - R/SPECIAL CIVIL APPLICATION NO. 13491 of 2021 With CIVIL APPLICATION (FOR ORDERS) NO. 1 of 2022 R/SPECIAL CIVIL APPLICATION NO. 17703 of 2021 - - - Dated:- 18-2-2022 - HONOURABLE MR. JUSTICE J.B. PARDIWALA AND HONOURABLE MS. JUSTICE NISHA M. THAKORE Appearance: MR AMAL PARESH DAVE(8961) for the Petitioner(s) No. 1,2 MR PARESH M DAVE(260) for the Petitioner(s) No. 1,2 MR DEVANG VYAS(2794) for the Respondent(s) No. 1 MR UTKARSH R SHARMA(6157) for the Respondent(s) No. 2,3,4 COMMON ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. Since the issues raised in both the writ applications are the same and the parties are also the same, those were taken up for hearing analogously an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be summarized as under: 5. The writ applicant is a company registered and incorporated under the Companies Act, 1956 (for short, the Act, 1956 ). The company is engaged into the business of manufacturing of textile yarns. 6. It is the case of the writ applicant company that under the old regime, the manufacturing activities of the writ applicant attracted levy of the Central Excise duty in the form of a tax on the manufacture of goods. The company was discharging its liability towards the payment of the Central Excise duty on the yarns manufactured in and cleared from the factory. 7. The company has been utilizing various inputs and input services in the manufacture of the final products namely the textile yarns and since such inputs and input services were delivered to the company by the suppliers on the payment of the appropriate amount of Excise duty, the company was availing credit of the duties so paid on the inputs and input services under the CENVAT Credit Scheme. 8. It is also the case of the writ applicant company that it has been selling the goods manufactured by it in the domestic trade on the payment of Excise duty and the company has also been export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of the accumulated ITC because substantial quantities of inputs, capital goods and input services were received and utilized for the manufacture and export of the goods and such credit was lying unutilized with the writ applicants. 15. In such circumstances referred to above, the writ applicants calculated the amount of refund in accordance with the formula provided by the Government under Rule 89(4) of the Rules for each of the months and accordingly, 22 refund claims were filed with all the necessary calculations supported with necessary documents. The writ applicants claimed refund of the unutlized credit aggregating to ₹ 85,85,13,169/- (Rupees Eighty Five Crore Eighty Five Lakh Thirteen Thousand One Hundred Sixty Nine only). 16. According to the writ applicants, the aforesaid amount was cleared and paid. 17. A similar claim, as above, for the month of November, 2019 was put forward by the writ applicants, but the same came to be rejected. The same came to be rejected essentially on the ground that the writ applicant was supposed to file its claim for refund of the unutilized credit under Rule 89(4B) of the CGST Rules and not on the basis of the formula of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect i.e. claimant has filed in category refund of unutilized ITC on account of exports without payment of tax as per 89 (4), instead of the correct category any other category as per Rule 89 (4B), the provisions of Rule 89 (4B) comes to the fore wherein the claimant has to file their refund claim in the system under any other category, and consequently the eligibility and quantification of refund is subjected to the principles laid down in Rule 89 (4B). 5.12 The Claimant's contention at Para 8 of their defence submissions is that even if the goods have been imported and later on exported under Advance Authorization, there is no restriction in sailing the benefit of refund claim of unutilized ITC on account of export of goods without payment of IGST. Even it is not the case of the department that sub rule (4B), in such situation, restrict the refund claim. Further, when the noticee imports the goods without payment of IGST, this itself shows that they do not cannot avail ITC on such goods as they import without payment of IGST. Since the noticed does not avail ITC on such imported inputs, the question of accumulation of credit in relation to such goods does not arise a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claimant gives an undertaking in writing that they shall not file an appeal in terms of Rule 93 of CGST Rules, 2017. Date: 24.02.2020 Place : Bharuch Signature (DSC): sd/- Name : N. B. Nangas Designation : Assistant Commissioner Office address: Division -VII, CGST, Vadodara II Commissionerate. 19. Being dissatisfied with the aforesaid order passed by the Assistant Commissioner, the writ applicants went in appeal before the Joint Commissioner, CGST and Central Excise, Appeals, Vadodara. 20. The appellate authority thought fit to remit the matter to the Assistant Commissioner. While remitting the matter, the appellate authority recorded a finding that the appellant i.e. writ applicant herein is eligible for refund of the accumulated credit, not under Rule 89(4) of the CGST Rules, 2017 as claimed, but under Rule 89(4B) of the Rules. We quote the relevant observations made by the appellate authority while disposing of the appeal as under: 5.5 Again, the appellant had pleaded that even if Rule 89(4B) is applied to the present case, the amount of ITC attributable to Zero rated supplies would have to be determined only based on the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressed on the legal and factual maintainability of the case whether in favour of appellant or Department. For remanding the matter, I rely on Hon'ble Gujarat High Court's judgment in the case of Medico Labs-2004 (273) ELT 0117 (Guj.), wherein it has been held that even after amendment of Section 35A or the Central Excise Act, the appellate authority has the power to set aside the decision, which is under appeal before it and it has power to remand the matter to the authority below for its fresh consideration. The same view has also been considered by the Hon'ble CESTAT, Ahmedabad in case of Bacha Motors (P) Ltd Vs. CST, Ahmedabad-2010 (20) STRO 575 . Accordingly, I hereby remand the matter to the adjudicating authority for fresh consideration, after setting aside the impugned order. 8. Appeal No.APL01/02/20-21 is disposed off in the above terms. Sd/- (Reena Ashis Dash) Joint Commissioner, CGST Central Excise, Appeals, Vadodara. 21. Being dissatisfied with the aforesaid order passed by the appellate authority, the writ applicant is here before this Court with the present writ applications. 22. There is one further challenge in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made applicable for the purpose of determining the claim so far as the refund is concerned? 27. Mr. Dave vehemently submitted that in fact, if there is any formula which could be said to have been provided for the purpose of adjudicating the claim, the same is to be found in Sub Rule (4) of Rule 89, as Sub Rule (4B) of Rule 89 does not provide for any formula. However, Mr. Dave invited the attention of this Court to the stance of the Commissioner, as reflected in the affidavit-in-reply filed on behalf of the respondents. We take notice of the fact that Shri Manoj Kumar Srivastava, Principal Commissioner of Central Goods and Service Tax and Central Excise, Vadodara II has affirmed the reply stating as under: 7.2 Para 15, 15 (a) to (c):- The petitioner s contentions that, they are unable to establish the quantum of ITC availed in respect of inputs or input services to the extent used in making export of goods (being an impossible exercise), is absolutely non-tenable, illogical and far from factual position. Every manufacturing process have clearly specified ratios of inputs/raw materials to be used which are to be strictly adhered to for production of finished go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint Commissioner (Appeals), although took the view that Sub Rule (4B) of Rule 89 of the Rules would apply, yet it thought fit to remit the matter so that the claim can be determined accordingly. Mr. Dave would submit that now since the principle of input / output ratio is to be applied for the purpose of determining the amount to be refunded, a fresh exercise will have to be undertaken by the Assistant Commissioner. 31. In view of the aforesaid, it is not even necessary for us to now quash and set aside the order passed by the Joint Commissioner (Appeals), as, in fact, the matter should go back to the Assistant Commissioner for the purpose of determination of the refund claim in accordance with the principle / formula, as provided and explained in the reply. But, at the same time, it would be necessary for us to quash and set aside the order passed by the Joint Commissioner dated 19th July 2021. It reads thus: ORDER (i) I confirm the demand of ₹ 85,37,07,928/- (Rupees Eighty Five Croes Thirty Seven Lakhs Seven Thousand Nine Hundred and Twenty Eight only) (sum Total of IGST ₹ 7,97,05,689/- + CGST ₹ 23,36,22,217/- + SGST ₹ 53,52,21,375/ ..... 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