Bombay High Court
M/S. Tien Yuan India Pvt. Ltd vs The Commissioner Of Central ... on 22 November, 2012
Bench: J.P. Devadhar, M.S. Sanklecha
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CENTRAL EXCISE APPEAL NO. 120 OF 2012
WITH
CENTRAL EXCISE APPEAL NO. 121 OF 2012
WITH
CENTRAL EXCISE APPEAL NO. 122 OF 2012
WITH
CENTRAL EXCISE APPEAL NO. 123 OF 2012
WITH
CENTRAL EXCISE APPEAL NO. 124 OF 2012
WITH
CENTRAL EXCISE APPEAL NO. 125 OF 2012
WITH
CENTRAL EXCISE APPEAL (L) NO. 126 OF 2012
ig WITH
CENTRAL EXCISE APPEAL NO. 126 OF 2012
WITH
CENTRAL EXCISE APPEAL (L) NO. 127 OF 2012
WITH
CENTRAL EXCISE APPEAL NO. 127 OF 2012
WITH
CENTRAL EXCISE APPEAL (L) NO. 128 OF 2012
WITH
CENTRAL EXCISE APPEAL (L) NO. 129 OF 2012
M/s. Tien Yuan India Pvt. Ltd. ]
th
Bhatawar, 6 Floor, 229 Nariman Point, ]
Mumbai - 400 021. ]
..Appellant
versus
The Commissioner of Central Excise ]
Belapur Commissionerate, having its ]
office at 1st Floor, CGO Complex, ]
CBD Belapur, Navi Mumbai - 400 614. ]
..Respondent
--------
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Mr. Sridharan, Sr. Advocate with Mr. Prakash Shah
with Mr. Jas Sanghavi with Mr. Uchit Jain i/b PDS
Legal for the Appellant.
Mr. Pradeep S. Jetly with Mr. Neelesh Vasant
Kalantri for the Respondent.
.............
CORAM : J.P. DEVADHAR &
M.S.SANKLECHA, JJ.
DATE : 22nd November, 2012
JUDGMENT:( Per M.S.SANKLECHA, J.)
These 12 appeals under Section 35G of the
Central Excise Act, 1944 (the Act), challenges the
common order dated 13.03.2012 passed by the Customs
Excise and Service Tax Appellate Tribunal (the
Tribunal) disposing of the 12 appeals filed by the
appellant before the Tribunal.
2 The following identical questions have
been formulated in all the 12 appeals for the
consideration of this court:
(a) Whether in the facts and
circumstances of the case, the Tribunal
was right in remanding the proceedings
to the Original Authority for
verification of requirement of Rule 5
of the Cenvat Credit Rules and
SNC 2/12 cexa 120-12.doc
fulfillment of conditions mentioned in
the Notification No. 5/2006 dated
14.03.2006 and not deciding the appeals
of the Appellants on merits?
(b) Whether in the facts and
circumstances of the case the
Appellants are entitled to refund of
un-utilized credit under Rule 5 of the
Cenvat Credit Rules, 2004?
(c) Whether the Tribunal is right
in holding that the Appellant did not
fulfill condition no.4 of the Appendix
to Notification No.5/2006 for claiming
the refund of un-utilized Cenvat Credit
under Rule 5 of Cenvat Credit Rules,
2004?
3 The appellant is engaged in the
manufacture of Menthol liquid BP/USP/ Menthol
crystal BP/Us, Rectified Paper Mint Oil. Menthone,
Mint, Terpene etc. which are cleared for export
under bond as well as for home consumption. The
appellant had filed 12 refund claims under Rule 5
of the Cenvat Credit Rules, 2004 (Cenvat Rules) on
the ground that they were unable to utilise the
cenvat credit taken on inputs used in the
manufacture of the final products cleared for
exports under bond/letter of undertaking.
SNC 3/12 cexa 120-12.doc
4 The Assistant Commissioner of Central
Excise had the 12 refund claims verified by the
Superintendent of Central Excise and on the basis
of report dated 20.05.2010 of the Superintendent of
Central Excise had sanctioned all the 12 refund
claims filed by the appellant.
5 Being aggrieved the Commissioner of
Central Excise reviewed all the 12 orders in
original resulting in filing of 12 appeals before
the Commissioner of Central Excise (Appeals). The
Commissioner of Central Excise (Appeals) by various
orders allowed all 12 appeals filed by the revenue.
These appeals were allowed on the ground that the
appellant herein had failed to produce
documents/evidence to the effect that credit of
duty on which refund was sought pertained to inputs
used in the manufacture of goods exported and had
remained un-utilised and therefore, conditions of
Notification no. 5/2006-C.E.(N.T.) dated 14.03.2006
issued under Rule 5 of the Cenvat Rules had not
been satisfied.
SNC 4/12 cexa 120-12.doc
6 In second appeal, the Tribunal by its
common order dated 13.03.2012 allowed the 12
appeals filed by the appellant by way of remand to
the adjudicating authority. The basis of the remand
was twofold one that the adjudicating authority had
not applied his mind independently to the refund
applications but merely went by the report of the
Superintendent of Central Excise and secondly the
batch wise correlation of inputs used in final
products i.e. 1:1 correlation could not be carried
out as the appellant had failed to produce
documents in support of the same. The Tribunal
held that the original authority would have to
verify whether the requirement of Rule 5 of the
Cenvat Rules and the conditions of Notification no.
5/2006 C.E. (N.T.) dated 14.03.2006 have been
satisfied by the appellant. The appellant was also
given liberty to produce any further evidence which
they may require to produce in support of its claim
for refund.
7 Mr. Sridharan, Senior Counsel appearing
SNC 5/12 cexa 120-12.doc
for the appellant submits that the impugned order
dated 13.03.2012 of the Tribunal be set aside and
the matter be remanded to the Tribunal for fresh
disposal. This was particularly so as in view of
the fact that by Notification No.7/2010 C.E.(N.T.)
dated 27.02.2010 the Notification No.5/2006 C.E.
(N.T.) dated 14.03.2006 has been amended with
retrospective effect from 14.03.2006. In view of
the above amendment refund of Cenvat credit would
be allowed even in respect of inputs used in or in
relation to the manufacture of final products.
Therefore according to him there was no requirement
to establish 1:1 co-relation between inputs and
final products for the purposes of the refund. This
aspect of the matter though considered by the
adjudicating authority has been completely ignored
by the Tribunal while disposing of the 12 appeals
by order dated 13.03.2012.
8 As against the above, Mr. Jetly, Counsel
for the respondent submits that no substantial
question of law arises in the present appeal as the
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matter has only been remanded for examining 12
refund claims filed by the appellant. In any event,
even the issue whether 1:1 correlation is to be
applied or not for the purposes of refund submits
that the issue could be decided in remand
proceedings. Thus no interference with the order of
the Tribunal is called for. Mr. Jetly submits that
the remand was justified as the adjudicating
authority while granting the refund has not
independently applied his mind to Notification
No.5/2006 C.E.(N.T.) dated 14.03.2006 and merely
relied upon the report submitted by the Range
Superintendent. Therefore Mr. Jetly submits that no
fault can be found with the order of the Tribunal
remanding the matter to the adjudicating authority
for fresh adjudication.
9 We have considered the submissions.
Normally, we would not interfere with an order of
the Tribunal remanding a matter for de-novo
adjudication. However, where the Tribunal while
setting aside an order and remanding the matter has
SNC 7/12 cexa 120-12.doc
overlooked a fundamental aspect of the matter going
to the root of the matter, then in such a case the
matter has to be sent back to the Tribunal to
consider that aspect of the matter, as it could
possibly lead to end of the dispute between the
parties. In this case we find that the
Superintendent of Central Excise had in his report
pointed out that in terms of Notification
No.7/2010-C.E.(N.T) dated 27.02.2010, the appellant
had filed its claim for refund in the revised
format. The adjudicating authority in his Order
dated 04.06.2010 has observed as under:
"7. The Superintendent, Central
Excise, Range-III/Taloja Division has
pointed out that the assessee has not
provided the exact 1:1 co-relation
between raw material to finished
exported goods. In other words the
report does not deny the use of
Mentha oil as input and also do not
mean that raw material were never
went in final product. It is the fact
that the input material was used in
finished product. The input material
being in liquid form and the same
being stored in a common discharge
tank, the intermixing of old and new
stock was possible but considering
the liquid nature of the input and
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output product the exact co relation
is unwarranted factor because in such
cases the production is tested on set
up standards of input: output ratio.
8. To this extent it is
confirmed that the assessee has
single discharge tank for input
material. Further, they receive the
input material into receiver for
batch production either from the
discharge tank or from the barrel to
fix the quantity of batch input. As
such though the stock is intermixed
the input quantity could be
ascertained. The position of the tank
being commonly used for storing the
liquid product, where from intake
material is streamlined for final
product do not disprove that the raw
material was not used in the final
product exported by the assessee. In
such typical and peculiar situation,
it has to be understood the issue by
applying mind and simple common
logic. In that case, the batch intake
quantity, the ratio analysis between
rat material to finished product, the
length of processing period, etc. is
very important. The assessee, under
self assessment declared that in the
particular month they have used the
input quantity of raw material in the
final product exported by them. This
declaration is not mere but supported
by batch analysis. They know the
input quantity used in final product,
which is exported. Therefore unless
any contrary position is established
by the department the assessee's
claim cannot be denied. From the
whole scenario, it appears that the
point of exact 1:1 co-relation seems
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to be not sustainable ground in the
production of liquid product from
liquid input product".
Therefore the adjudicating authority has
independently applied his mind and held that 1:1
correlation is not required for the grant of refund
of Cenvat credit. In fact in appeal the
Commissioner of Central Excise (Appeals) has wile
allowing the appeal of the revenue has held that-
"14. The respondents have also
placed reliance upon the CBEC
circular No.20/01/2010-ST dated
19/1/2010. The circular has provided
for a procedure to address the
problem of proving one to one co
relationship and has prescribed a
proforma for declaration under
paragraph 3:2:2. However, the
respondents have not produced the
details in the prescribed proforma
with the appeal or during the
course of personal hearing. As such
contention of the respondent is not
sustainable".
Thus the Commissioner of Central Excise
(Appeals) completely overlooked the Notification
No.7/2010-C.E.(N.T.) dated 27.02.2010 and the
filing of the refund claim in the revised proforma
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consequent to Notification No.7/2010-C.E.(N.T.)
dated 27.02.2010. The Tribunal also while passing
the order dated 13.03.2012 has not considered the
effect of amendment to Notification No.5/2006 C.E.
(N.T.) dated 14.03.2006 by Notification No.
7/2010C.E.(N.T.) dated 27.03.2010. This
retrospective effect is given by Section 74 of the
Finance Act, 2010. This amendment appears to have
done away with 1:1 correlation between input and
final product for refund under Rule 5 of Cenvat
Rules.
10 In view of the above we set aside the
common order dated 13.03.2012 of the Tribunal and
direct the Tribunal to decide the appeals after
considering the effect of the amended Notification
No.5/2006 C.E.(N.T.) dated 14.03.2006 on the refund
application filed by the appellants.
11 In the result we are not answering the
questions raised in these appeals as the Tribunal
would be deciding the matter afresh. All the
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appeals are disposed of in the above terms with no
order as to costs.
(M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)
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