CIR NO.702/18/2003-CX, DT. 13/03/2003
- Document type
- Circular
- Reference no.
- J
- Dated
Refund of unutilized deemed credit on grey fabrics used in the processed fabrics exported under bond
Refund of unutilized deemed credit on grey fabrics used in the processed fabrics exported under bond
2. 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.
3. Accordingly, it is clarified 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.
4. Trade and field formations may please be informed suitably.
5. Receipt of the same may be acknowledged.
6. Hindi version will follow.
Vijay Mohan Jain
Under Secretary to the Govt. of India