2007 (1) TMI 8 - AT - Central Excise

Refund Cenvat/Modvat Accumulation of credit Refund claim of appellant rejected by the authorities on the ground that the condition not satisfy by appellant After convincing with the appellant refund claim allowed by the authority

Summary

Issues:
Refund claims under Rule 5 of Cenvat Credit Rules, 2002 rejected by authorities below.

Analysis:
The appellants had taken cenvat credit for duty paid on inputs, Grey fabrics, used in manufacturing processed fabrics exported under Bond. Refund claims for accumulated cenvat credit from Dec. 03 to April 04 were filed under Rule 5, rejected by authorities for not fulfilling conditions. However, Tribunal previously allowed refund claim for October & November 2003.

In the current case, 70% of final product was cleared for home consumption, ongoing process noted by authorities. They argued cenvat credit was utilized, and refund can only be granted if credit cannot be utilized. The appellants' Consultant argued utilization must be proved as per condition 5 of the Notification, mentioning monthly refund claim pertains to utilized amount at month-end, beyond capacity to keep for future. Citing Navbharat Industries v. CCE, Thane-I, the Consultant emphasized Rule 5 allows refund if credit cannot be adjusted, with no requirement for authorities to find reasons for non-adjustment.

The Tribunal agreed with the appellants' Counsel that credit remained due to non-utilization in a specific month, not to be carried forward. Refund was deemed permissible under Rule 5 and Rule 3 of Cenvat Credit Rules, 2002. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.