Refund of CENVAT Credit to exporters - Clear quarterly confusion
NOTIFICATION No 5/2006 CE(NT) dated 14th March 2006 issued under Rule 5 of the CENVAT Credit Rules 2004 specifies conditions and procedure for filing the claims for refund of unutilised credit on inputs or input services used for export of finished goods/ Output services. Though this facility was in vogue for manufacturers even before 2006 ( Under Notification No 11/2002 CE(NT)), with the extension of refund facility to output service providers also from 2006 onwards, there is sudden spurt in the number of refund claims by the service exporters and the associated disputes. While there are clear instruction on processing of the refund claims, especially for service exporters, still it seems the field formation have not understood the spirit of the scheme and have been interpreting the literal meaning of the words quarter and month used in the Notification. For example, if the claims are filed for a period of more than a quarter, the same are rejected by taking a view that the same should have been filed quarterly/ monthly. In a recent case the Chennai Bench of CESTAT (2011-TIOL-149-CESTAT-MAD)- has held:
The stipulation in Notification No. 5/2006 that the claim for refund of CENVAT credit relating to export should be made on a quarter basis is more for administrative convenience and this is to discourage the exporters to prefer too many claims leading to voluminous work at the divisional level. This does not specify any time limit for claiming the refund of credit.
Perhaps a suitable clarification that there is no mandatory requirement for filing the claims only on monthly / quarterly basis would help the exporters.