2008 (11) TMI 525 - AT - Central Excise

Refund - Cash refund - closure of factory of appellant - Held that - in the case of Slovak India Trading Co. Pvt. Ltd. v. CCE, Bangalore 2005 (8) TMI 273 - CESTAT, BANGALORE the Tribunal has held that when assessee goes out of Modvat scheme or when company is closed, refund claim can be made in cash - In the present case, the appellants have closed factory and surrendered their excise license - cash refund is admissible to the appellants - appeal allowed.

Summary

Issues:
1. Entitlement to one-time deemed credit on gray fabrics.
2. Disallowance of credit by the Deputy Commissioner.
3. Appeal against the refund by way of Cenvat credit.
4. Entitlement to refund in cash.
5. Applicability of Slovak India Trading Co. Pvt. Ltd. case.

The appellants were engaged in processing cotton fabrics entitled to avail one-time deemed credit on gray fabrics as per Notification No. 25/2003. The Deputy Commissioner disallowed the credit due to a delayed declaration filing. The Commissioner (Appeals) later sanctioned a partial claim, leading to an appeal against the refund by way of Cenvat credit. The issue revolved around the entitlement to refund in cash, referencing the Slovak India Trading Co. Pvt. Ltd. case, where it was established that cash refund is permissible when there is no manufacture due to factory closure. Given the appellants had closed their factory and surrendered their excise license, the Tribunal allowed the cash refund, setting aside the order related to Cenvat credit refund.

In the present case, the primary issue was whether the appellants were entitled to a one-time deemed credit on gray fabrics under the Central Excise Tariff Act. The Deputy Commissioner disallowed the credit due to a delayed declaration filing, leading to a penalty and interest imposition. However, the Commissioner (Appeals) later sanctioned a partial claim, allowing a portion as Cenvat credit and the remaining amount to be paid in cash. The Tribunal, referencing the Slovak India Trading Co. Pvt. Ltd. case, held that cash refund is admissible when there is no manufacture due to factory closure. As the appellants had closed their factory and surrendered the excise license, the Tribunal allowed the cash refund, overturning the earlier decision on the Cenvat credit refund.

The Tribunal's decision was influenced by the Slovak India Trading Co. Pvt. Ltd. case, which established the permissibility of cash refunds in cases of factory closure where no manufacture occurs. This legal precedent was crucial in determining the appellants' entitlement to a cash refund in the present case. By applying the ruling from the Slovak India Trading Co. Pvt. Ltd. case, the Tribunal set aside the order related to the Cenvat credit refund and allowed the appeal for a cash refund of the specified amount. The decision highlighted the importance of legal precedents in interpreting and applying relevant laws and regulations in similar cases to ensure consistency and fairness in judgments.