HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT

JAIPUR

D.B. Central/Excise Appeal No. 133 / 2017

Commissioner of Customs & Excise-jaipur-I, (now Known As

Commissioner, Central Goods & Service Tax), Central Goods &

Service Tax Commissionerate, Surya Nagar, Alwar Raj.

----Appellant

Versus

M/s Continental Engines Ltd. (machine Division), A-88, RIICO

Industrial Area, Bhiwadi, District Alwar Raj.

----Respondent

_____________________________________________________

For Appellant(s) : Mr. Sandeep Pathak

For Respondent(s) : Mr. P.K. Kasliwal with Mr. Priyesh Kasliwal

_____________________________________________________

HON'BLE MR. JUSTICE K.S.JHAVERI

HON'BLE MR. JUSTICE VIJAY KUMAR VYAS

Order

14/02/2018

By way of this appeal, the department has challenged the

judgment and order of the Tribunal whereby the Tribunal has

dismissed the appeal of the Department.

Counsel for the appellant has framed the following

substantial questions of law:-

“i) Whether the ld CESTAT was correct in allowing

the refund of Cenvat Credit of Central Excise duty

paid in respect of raw material procured from DTA

Units under Rule 5 of the CENVAT Credit Rules,

2004 to the assessee and thereby misinterpreting

the said provision?

Counsel for the appellant has relied upon the decision of

Karnataka High Court in case of Commissioner of Customs,

(2 of 4)

[EXCIA-133/2017]

Bangalore vs. ANZ International reported in 2009 (233) E.L.T. 40

(Kar.) which has been confirmed by the Supreme Court wherein it

has been held as under:-

“4. After hearing both the sides and on perusal of

record, it appears that the identical issue has come

up before the Tribunal in the case of ANZ

International vs. CC, Bangalore -2008 (224) ELT 573

(Tri.Bang.) which was assailed before the High Court

and finally, before the Hon’ble Supreme Court where

it was uphuld (Commissioner vs. ANZ International

-2009 (240) ELT A16 (SC) by observing that 100%

Export Oriented Unit is entitled to take cenvat credit

of duty on inputs procured indigenously and when

they were not in a position to utilise the same, they

are entitled for benefit of refund under Rule 5 of

Cenvat Credit Rules, 2004.

The respondent-assessee procured casting articles

from M/s Continental Engines Limited to its sister

concern on payment of Central Excise Duty. The

respondent-assessee was engaged in exporting its

final products without payment of duty under bond

in terms of the provisions of Rule 19 of the Central

Excise Rules, 2002. Since the proportion of domestic

clearances of the respondent-assessee was miniscule

during the relevant period, the respondent-assessee

could not utilise the cenvat credit availed by them

and hence, filed refund claims in respect of such

utilised Cenvat Credit under Rule 5 of the Cenvat

Credit Rules, 2004, but the same was denied by the

Commissioner. However, the Commissioner in appeal

vide order dated 16.09.2016 allowed the appeal filed

by the respondent to allow the refund under Rule 5

of the Cenvat Credit Rules. Being aggrieved,

department has filed the present appeal.”

Counsel for the appellant has taken us to findings of the AO

which reads as under:-

“19. I find that reliance of DGFT Circular No. 16(RE-

2012/2009-17 dated 15.03.2013) placed in SCN is in

reference of availment of exemption of Central

Excise duty i.e. Terminal Excise Duty, DGFT has

denied the refund of above duty for the reason that

Supply of goods to EOU by DTA unit are ab initio

exempted from payment of excise duties and in

cases, where exemption is mandated, the relevant

taxes should not have been collected to begin with,

(3 of 4)

[EXCIA-133/2017]

this circular of DGFT also support the view taken by

the department in the Show Cause Notice that

instead of payment of duty of Central Excise on

supplies of the goods to EOU and obtaining the

refund of Terminal Excise Duty, the DTA unit s