2012 (1) TMI 162 - AT - Central Excise

Refund in cash - whether debit made in CENVAT/MODVAT account refund can be made in cash? - Held that - the debit entry was made in the year 1997 whereas the factory was closed in the year 2000 - This case is fairly covered by the decision in the case of Kochar Sung-Up Acrylic Limited 2010 (8) TMI 330 - CESTAT NEW DELHI wherein the Tribunal upheld the refund made in cash to the assessee and rejected the claim of the Revenue that refund should have been given by way of credit in the Cenvat credit account - refund in cash allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Central Excise duty short paid by the appellant, refund claim sanctioned as credit in Cenvat credit account, rejection of cash refund claim by Commissioner (Appeals), applicability of previous Tribunal decisions on cash refund eligibility.

Analysis:

1. Central Excise Duty Short Paid:
The appellant, engaged in the manufacture of Texturised Yarn, was found to have collected extra amounts from customers in the guise of PME charges without paying Central Excise duty. The officers noted discrepancies in the invoices related to Octroi, Insurance, and Freight charges. The appellant had short paid Central Excise duty totaling &8377; 7,00,873. A show cause notice was issued, resulting in confirmation of duty and imposition of a penalty by the Adjudicating authority. The Commissioner (Appeals) later set aside the original order.

2. Refund Claim Sanctioned as Credit:
The appellant's refund claim of &8377; 7,00,873 was sanctioned with interest but credited to their Cenvat credit account. The appellant, having closed down their unit and surrendered the registration certificate, sought a cash refund instead. The Commissioner (Appeals) rejected this claim, citing a previous Tribunal decision in the case of Gauri Plasticulture Pvt. Limited, which held that duty debit in a credit account cannot be refunded in cash.

3. Cash Refund Eligibility:
The appellant argued for cash refund based on a different Tribunal decision in the case of Kochar Sung-Up Acrylic Limited, where a similar issue was decided in favor of cash refund. The Tribunal distinguished the decision in Gauri Plasticulture Pvt. Limited by allowing cash refund in certain circumstances, such as when the registration certificate had been surrendered before the duty debit entry. In the present case, the Tribunal found that the appellant's situation aligned with the criteria set in the Kochar Sung-Up Acrylic Limited case, leading to the allowance of the appeal with consequential relief for the appellant.

In conclusion, the Tribunal allowed the appeal, granting the appellant a cash refund based on the specific circumstances and previous Tribunal decisions cited by the appellant's counsel. The judgment emphasized the importance of aligning the refund eligibility criteria with the timing of duty debit entries and the operational status of the manufacturing unit.