CHENNAI II
COMMISSIONERATE
692 MHU
COMPLEX NANDANAM CHENNAI-35.
TRADE NOTICE NO.19 /2003. DATED -04-2003.
Subject: -
Refund of unutilized deemed credit on grey fabrics used in the processed fabrics exported under bond – Reg
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A doubt has been
raised in the Board whether the refund claims
of unutilized deemed credit of duty on procurement of grey
fabrics used in the making of processed fabrics ultimately exported can be
refunded in the background of the objection raised by C&AG about the
admissibility of deemed credit on grey fabrics. C&AG has raised an
objection that since grey fabrics is not mentioned as ‘declared inputs’ in the
notification No.29/96-CE(NT) dated 03.09.96 (relevant at the material time),
the deemed credit is not available thereon. Certain field formations have taken
the view that since the admissibility of the deemed credit is under dispute,
the unutilized credit, if any, accumulated on account of exports can not be
refunded. A linked issue has been raised about grant of refund of such
unutilized credit for the period 01.07.2001 to 28.02.2002 as it has been viewed
that the supporting notification prescribing the procedure of grant of such
refunds was issued only on 01.03.2002 vide notification No.11/2002-CE (NT),
dated 1.3.2002.
The above issues have
been examined by the Board. It is observed
that
Department has contested the audit objection stating that although grey fabrics
are not included as the declared inputs in the said notification, these are
made out of duty paid yarn/ fibres, which are declared inputs and have suffered
appropriate excise duty. Also deemed credit is admissible under the erstwhile
rule 57A(2) of Central Excise Rules, 1944 even when the declared inputs are not
used directly in the manufacture of final products but are contained in the
final products.
Though
the issue is not settled yet, Board reiterates its earlier view and observes
that the refund of the said unutilized deemed credit on grey fabrics is
admissible. On the second issue, it is observed that the substantive provisions
to grant such refund existed from 01.07.2001 in terms of rule 5 of CENVAT
Credit Rules, 2001. Thus, refund being a substantive right, may not be denied
merely because a notification prescribing the procedure for claiming the refund
was issued later i.e. on 01.03.2002.
Accordingly, it is clarified by the Board that refund of
unutilized
deemed
credit due to export of processed fabrics may not be denied on the ground that
the eligibility of deemed credit is under dispute with C&AG. Similarly, the
refunds for the period 01.07.2001 to 28.02.2002 may also be dealt with on merit
in accordance with the said notification dated 1st March, 2002.
The contents of this Trade Notice may please be brought to
the notice
of
all the constituent members of your Association and the manufacturers of
textile and textile articles in particular.
(Authority:
Board's Circular No.702/18/2003-CX 13t
h March, 2003
from File
F.No.267/23/2002-CX-8)
(Issued from
File C.No. IV/16/217/2003 CX Policy)
-Sd-
(K.R.UDAY
BHASKAR)
ADDITIONAL
COMMISSIONER (TECH)
To
Trade & Department.( As
per Mailing List )