Veer-0-Metals Pvt Ltd Vs Commissioner-Commissioner of Central Tax (CESTAT Bangalore)
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Bangalore bench, has ruled in favour of M/s Veer-0-Metals Pvt Ltd, a 100% Export Oriented Unit (EOU), directing the tax authorities to grant a cash refund of unutilized Cenvat credit for the period spanning from January to September 2015. The tribunal’s decision hinged on the interpretation of the transitional provisions under Section 142 of the Central Goods and Services Tax (CGST) Act, 2017, which govern the fate of pending claims and appeals from the pre-GST indirect tax regime.
The appellant, engaged in the manufacture and export of sheet metal products, had accumulated Cenvat credit on inputs and input services. As an EOU, the company made both physical exports outside India and supplied goods to other EOUs through Inter Unit Transfer (IUT). The dispute arose when the appellant claimed a cash refund of the unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 27/2012 CE (NT).
The Deputy Commissioner of Central Excise initially sanctioned partial refunds, restricting the cash refund only to the extent of goods physically exported out of India. The refund claims pertaining to goods cleared to other EOUs on an IUT basis were rejected. This rejection was primarily based on an amendment effective from March 1, 2015, which inserted clause (1A) in the Explanation to Rule 5 of the CCR. This amendment defined “export goods” as goods “to be taken out of India to a place outside India,” implying that only physical exports were eligible for cash refunds under Rule 5 thereafter, excluding deemed exports like supplies to other EOUs.
