Issue: Whether refund of CENVAT credit is allowed if input services were used in relation to export and the export proceeds were not realized?
Held: Yes,Refund of CENVAT available when export proceeds were not realized
M/s P&P Overseas Vs. Commissioner of Central Excise, Excise Appeal Nos. 1307-1308 of 2011, Date of Decision: 29.10.2014, CESTAT – New Delhi
The appellant are a 100% EOU. They could not utilize the Cenvat credit for payment of duty on DTA clearances and since the accumulated Cenvat credit was attributable to the input services which had been used in or in relation to manufacture of the finished products which has been exported out of India, the appellant filed two claims for the period from July 2008 to September 2008 and October 2008 to December 2008 for cash refund of the accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The refund claims were decided by Assistant Commissioner by two separate orders. The Assistant Commissioner disallowed certain portion of refund claim filed by the appellant on the ground that the CHA services and courier services are not eligible for Cenvat credit and secondly the export proceeds have not been received by the appellant. The Commissioner (Appeals) upheld the order of Assistant Commissioner.
On the matter before CESTAT, to the first ground given by the Assistant Commissioner for disallowance was that the CHA services and courier services are not eligible for Cenvat credit, the Hon’ble CESTAT held that the same issue was already decided in the favour of appellant earlier. So, this ground is not valid for rejection. The second ground for rejection was that the export proceeds have not been received by the appellant to this the Hon’ble Cestat held this condition is neither there in Rule 5 of the Cenvat Credit Rules nor this condition has been prescribed in the Notification No. 5/2006-C.E. (N.T.) issued under Rule 5 of the Cenvat Credit Rules. In view of this, the denial of refund claim on the ground that the export proceeds have not been received is not sustainable.