2008 (12) TMI 605 - AT - Central Excise

Summary

Issues involved: Rejection of refund claim for accumulated Cenvat credit.

Summary:
The appeal was filed against the rejection of a refund claim for accumulated Cenvat credit amounting to Rs. 7,57,455. The appellant stopped paying duty on the finished product due to higher duty on inputs and lower duty on finished products, resulting in accumulated credit. The appellant cited a Karnataka High Court judgment allowing refunds under Rule 5 of Cenvat Credit Rules when a factory is closed. However, the Larger Bench decision in the case of M/s. Gauri Plasticulture (P) Ltd. held that unutilized credit lapses once the license is surrendered. The appellant argued that the High Court judgment was not considered by the Larger Bench and sought an extension of benefits.

The respondent pointed out that the High Court case involved unique circumstances where the appellant had already surrendered registration and could not utilize the credit. In this case, the accumulation was due to duty rate distortions, and the appellant was not prevented from using the credit. The respondent argued that the Larger Bench decision applied, and cash refund could not be allowed.

After considering both sides, the Tribunal found that the Larger Bench decision applied to the present case. The appellant's claim for refund was based on accumulated credit, not exports, and there was no evidence of being prevented from using the credit. Since the Cenvat Credit Rules do not provide for refunds in such situations, the Tribunal upheld the lower authorities' decision to reject the appeal.