By TIOL News Service

MUMBAI, NOV 21, 2017: THE assessee is in appeal against denial of refund of CENVAT credit under Rule 5 of CCR.

It is submitted that they are a 100% EOU and are involved in export of goods and their refund claim was rejected on the following grounds -

i) They had availed credit on the strength of photocopy of the invoice and the original and duplicate were not produced. They had not followed the procedure prescribed by trade notice for availing credit in such circumstances.

ii) They had taken credit of certain amount on 30th June, whereas the invoice was raised on 1st of July.

The appellant contended that both the grounds pertain to denial of CENVAT credit availed and that no SCNu/r 14 of the CCR, 2004 was issued in this regard. Inasmuch as it is emphasized that in the proceedings relating to refund u/r 5 of CCR, availment of cenvat credit cannot be questioned.

The AR justified the order denying refund.

The Bench observed –

"5. ... I find that the proceedings in the impugned case are relating to refund of accumulated cenvat credit. The impugned proceedings seek to deny the cenvat credit availed by the appellants on the grounds that the credit was availed on photocopy of invoices or that credit was availed even before the invoice was issued. To deny cenvat credit, Cenvat Credit Rules prescribes a procedure where show-cause notice is required to be issued. Without issue of notice it is not open to revenue to deny cenvat credit in proceedings relating to refund under Rule 5 of Cenvat Credit Rules. Since no notice has been issued seeking reversal of the cenvatcredit which is allegedly wrongly claimed. The revenue has no option but to process the refund under Rule 5 treating the same as a valid cenvat credit."

The impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-4079-CESTAT-MUM)