No refund on Cenvat credit

CHATROOM/ But an export house can use unutilised Cenvat credit to pay other domestic dues

My firm's aggregate export for the last three years is more than Rs 15 crore, after giving double weightage for our status as small scale industry and as an ISO 9000 unit. Further, we export to handicrafts to Latin American countries and are located in Jammu & Kashmir. Can we get status recognition as a one-star export house?

Double weightage is available for grant of Star Export House status if you are a manufacturer-exporter in the small scale industry/tiny sector/cottage sector or if your unit is registered with the Khadi Village Industries Commission, or Khadi Village Industries Board, or if your unit is located in North Eastern States, Sikkim or Jammu & Kashmir, or if you are a unit exporting handloom/ handicrafts/hand knotted or silk carpets, or if you are exporting to specified countries in Latin America/CIS/sub-Saharan Africa, or if your unit has an ISO 9000 (series)/ ISO 14000 (series) /WHOGMP/HACCP/SEI CMM level-II and above status granted by specified agencies, or if you export services, or if you export agro products.

However, a shipment can get double weightage only once in any one of the above category. You can not count double weightage under each category; this double weightage shall be admissible to merchant as well as manufacturer-exporters.

Now, in the current policy, a new restriction has come in that may work against the grant of export house recognition to you.

Sr No 4 of note to Para 3.5.2 of the Foreign Trade Policy says that recognition of one star export house status shall be considered only in case an exporter has minimum export performance of Rs 15 crore or more during any two years out of the current and preceding 3 years.

So, even after taking double weightage, the aggregate of exports in any two out of previous three years and current year should exceed Rs 15 crore. Otherwise, you may not be able to get the recognition. However, if you meet this condition, you can get status recognition as a one-star export house.

We are supplying most of the goods produced to EOUs without excise duty payment against CT3 form. Due to this, we have a fairly large amount of Cenvat credit amount un-utilised. Can you suggest how we can get refund of this un-utilised credit?

Rule 5 of Cenvat Credit Rules, 2004, deals only with physical exports. So you cannot get refund for the unutilised credit. However, you can use the credit to pay duty on your other domestic clearances, including clearances to EOU. So, you may ask EOU not to issue CT3 and clear your goods to EOU on duty payment by debit of your Cenvat credit. The EOU can pay you the excise duty and take credit of the same. The EOU can ask for refund of the credit under Rule 5.

Alternately, if the EOU refuses to pay you the duty, you may claim refund of terminal excise duty from the licensing authorities in terms of Para 8.4.2 of Foreign Trade Policy.

TNC Rajagopalan will answer questions from readers on SME-related issues pertaining to taxes, exim policies or registrations/reservations, etc. Readers can now send mails to smequeries@business-standard.com