2008 (6) TMI 439 - AT - Central Excise

Summary

Issues: Denial of refund of unutilized credit before conversion of DTA unit into 100% EOU.

Analysis:
1. The appellant contested the denial of refund of credit amounting to Rs. 1,17,847/- which remained unutilized before the conversion of their DTA unit into a 100% EOU. The denial was based on Board Circular No. 77/99 Cus. and para 6.19 (a) of the Foreign Trade Policy, stating that Cenvat credit for plant and machinery installed in the factory and remaining unutilized upon conversion will lapse and cannot be used post-conversion. The appellant argued that the Circular only pertains to plant and machinery used in or in relation to the manufacture of the final product, and the Foreign Trade Policy does not impact the refund of credit. They contended that since the inputs received were indeed used in or in relation to the manufacturing process, the refund should not be rejected.

2. The Tribunal examined the submissions and noted that there is no provision under Central Excise for the refund of unutilized credit held by the appellant. Refund can only be granted when such inputs are utilized in the manufacturing of export products where the duty-paid input credits are used. In this case, the appellant sought a refund for input credit during a period when the unit was not a 100% EOU and pertained to domestic clearances, not exports. Therefore, the grounds for granting a refund were not met in the present situation.

3. Consequently, the Tribunal found that the appeal lacked merit and was accordingly dismissed. Despite the absence of representation from the appellants, the Tribunal considered the arguments put forth by the ld. JDR and reviewed the records before reaching the decision to dismiss the appeal. The judgment highlighted that the specific circumstances of the case did not align with the conditions necessary for granting a refund of unutilized credit, leading to the dismissal of the appeal.