By TIOL News Service

MUMBAI, NOV 03, 2017: THE appellant filed a refund claim in respect of BED plus Education Cess paid by them through PLA in respect of finished goods cleared by them by availing Notification No. 39/2001-CE dated 31/07/2001.

Notification No. 39/2001-CE works thus - that the manufacturer, who after utilizing the entire Cenvat Credit available to him in the previous month pays the balance duty in cash, the duty paid in cash will be refunded.

Further, by an amending notification No. 37/2007-CE(NT) dated 17/09/2007 it is stipulated that units availing benefit of Notification No. 39/2001-CE cannot export goods under claim of rebate.

The claim was rejected by the lower authorities and, therefore, the appellant is before the Tribunal.

In the present case, it is alleged that the appellant utilized CENVAT Credit amounting to Rs.69,85,286/- for exporting goods under claim of rebate and that resulted in payment of Rs.18,07,436/- in PLA. Inasmuch as by adopting this mechanism, the appellant wrongly claimed the benefit of refund, the lower authorities concluded.

The appellant tabulated the duty paid through PLA, CENVAT credit availed and utilized for export and the balance credit utilized at the end of the month and argues that on the one hand, Revenue rejects the refund on the ground that duty on goods exported should not have been debited through CENVAT but goods should have been exported under bond and on the other hand while ascertaining the duty liability, the duty payable on export goods is also considered.

It is also emphasized that the appellants had not claimed rebate in respect of the goods exported and, therefore, refund of Rs.18,07,436/- should have been granted to them.

The AR supported the order.

The Bench observed -

"4. …, the law clearly lays down the person availing benefit of Notification No. 39/2001-CE will utilize the Cenvat Credit only for domestic clearances and if after utilizing the entire credit for such domestic clearances if any duty is paid in cash, the same will be refunded to the manufacturer. In the instant case, the appellants have exhausted their Cenvat Credit on export under rebate in violation of Notification No. 37/2007. Consequently, since the appellants utilized most of their credit available in rebate, they ended up paying part of the duty in cash, for which they have filed the refund claim. This scheme may not have obviously benefited the appellant but was in clear violation of Notification and therefore, such exercises in violation of specific provision of Notification cannot be allowed. In arguments, Ld. Counsel has stated that even though if they have not used the Cenvat Credit for rebate still they would have paid some duty in cash. I find that the arguments are mistaken. The appellant had Rs.76,88,050/- as Cenvat credit available with them and the total duty liability was a mere of Rs.25,10,200/- in respect of domestic clearances. Thus, the appellant would have ended paying the entire duty by Cenvat and they had followed the condition of Notification No. 39/2001-CE, consequently no refund in cash would have arisen."

Concluding that there is no merit in the appeal filed by the appellant,the same was dismissed.

(See 2017-TIOL-3880-CESTAT-MUM)