2009 (11) TMI 802 - AT - Central Excise

Summary

Issues: Eligibility for refund of duty paid on HSD oil under Rule 2(k) of the Cenvat Credit Rules for a 100% EOU.

Analysis:
The lower appellate authority held that the appellants are not eligible for a refund of duty paid on HSD oil as it is not covered under Rule 2(k) of the Cenvat Credit Rules. The appellant argued citing Circular No. 799/32/2004-EX that a 100% EOU unable to utilize credit should be allowed a refund, including HSD oil used as fuel. The Department's representative contended that eligibility for input duty credit is a prerequisite for considering a refund. The Circular applies when an EOU is eligible but unable to utilize credit, not when an assessee is ineligible for input duty credit, as in the case of HSD oil used as fuel.

The Tribunal noted that the Circular dated 23-9-2004 refers to Notification No. 18/2004-C.E. (N.T.) dated 6-9-04, allowing 100% EOUs to use Cenvat credit for duty payment on goods cleared domestically. Both the Circular and Notification pertain to credit utilization. Credit utilization or refund is only possible if the assessee is eligible for credit. The lower appellate authority correctly observed that HSD oil is not covered under the Cenvat Credit Rules, making the appellants ineligible for credit on the duty paid. Consequently, without eligibility for credit, the question of utilizing or refunding it does not arise. Thus, the Tribunal upheld the lower appellate authority's decision as legally sound, leading to the dismissal of the appeal.