CHANDRA COTTON FABRICS Vs. CCE

JUDGEMENT

(1.) THE captioned appeal has been filed by M/s. Chandra Cotton Fabrics (CCF), Tiruppur. In the impugned order the Commissioner (Appeals) affirmed the order of the original authority rejecting the claim for refund of Rs. 4,77,475/ - in terms of Rule 5 of the Cenvat Credit Rules, 2002 (CCR). The claim relates to April and May, 2004. The appellant is engaged in the manufacture and export of fabrics. From the records it is seen that the finished goods of the appellants were entirely cleared for export. As the appellant was not in a position to utilize the accumulated cenvat credit for payment of duty for want of clearances to home market, they had claimed refund of the accumulated cenvat credit. The lower authorities rejected the claim on the basis that in terms of Notification No. 11/02 -CE(NT) dated 01.03.02, refund of credit of inputs used in the manufacture of final products cleared for exports under bond could be allowed, inter alia, when the manufacturer is not in a position to utilize the credit of the duty on inputs allowed under Rule 3 of the said CCR against goods exported during the quarter or month to which the claim relates. The authorities have taken a view that since the exports could be made on payment of duty under claim for rebate, an exporter cannot be held to be not in a position to utilize the credit of the duty on inputs allowed under Rule 3.

(2.) THE Ld. Counsel for the appellants submits that the Notification issued under Rule 5 of CCR, deals with entitlement to refund of manufacturer exporters who export their final products under bond. Therefore, the interpretation of the condition to allow the refund as the manufacturer not being able to export the goods on payment of duty adopted by the authorities is a patently erroneous reading of the notification. Rule 5 of the CCR provided that a manufacturer who exports his final products could utilize the input credit for clearance of final products for home consumption or for export on payment of duty, "where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount" subject to conditions prescribed by the Government. The condition of the Notification issued in this connection held against the appellants by the lower authorities does not bar refund of the accumulated credit. The condition allows refund of credit to manufacturer exporters who cannot utilize the accumulated input credit for want of clearances for home consumption.

(3.) THE Ld. SDR reiterates the reasoning contained in the impugned order.