2007 (9) TMI 497 - AT - Central Excise

Summary

Issues:
- Appeal against the order of the Commissioner (Appeals) regarding refund of unutilized Cenvat credit due to final product exemption.
- Whether the appellant was forced to pay from PLA instead of using Cenvat credit.
- Applicability of the decision in the case of M/s. Gauri Plasticulture regarding refund of credit in cash due to Department's actions.

Analysis:
- The appellant, a computer manufacturer, sought a cash refund of Rs. 9,27,152/- from their unutilized Cenvat credit due to their final product being fully exempted from duty. The Original Authority and Commissioner (Appeals) denied the refund, stating no provision for it.
- The appellant argued they were compelled by Excise authorities to pay from PLA instead of using Cenvat credit, citing specific instances where they were instructed to make payments in cash despite having sufficient Cenvat balance.
- The appellant relied on the M/s. Gauri Plasticulture case, where it was held that if an assessee is unable to utilize credit due to Department's actions, cash refund should be allowed. The appellant contended that they paid from PLA under compulsion, as evidenced by fixed amounts paid and consistent claims.
- The Department argued there was no evidence of compulsion to pay from PLA and attributed credit accumulation to duty rate changes. They pointed out instances where the appellant paid duty by debiting Cenvat account, contradicting the compulsion claim.
- The Tribunal analyzed the submissions and concluded that the appellant paid from PLA under compulsion or persuasion by Excise officers for revenue mobilization. Citing the M/s. Gauri Plasticulture case, the Tribunal allowed the appeal for cash refund of unutilized credit, emphasizing equity and justice principles.
- The Tribunal highlighted that if the Department prevents an assessee from utilizing available credit, leading to cash payments, refund should be granted upon dispute resolution. The decision emphasized the importance of fairness and ensuring that assessee's credit is not unjustly blocked, allowing for cash refund in such cases.
- Ultimately, the appeal was allowed with consequential relief, aligning with the principles established in the M/s. Gauri Plasticulture case and emphasizing the right to cash refund in situations where credit utilization is hindered by Department actions.