2012 (6) TMI 842 - AT - Central Excise

Summary

Issues Involved:
1. Whether the respondent violated condition 1A of Notification No. 65/2003-CE by not utilizing the entire Cenvat Credit before claiming a cash refund.
2. Whether the adjudicating authority correctly restricted the refund claim of the respondent.
3. Whether the first appellate authority's decision to allow the re-credit of Rs. 3,68,94,217/- and disallow Rs. 60,50,093/- was justified.

Summary:

Issue 1: Violation of Condition 1A of Notification No. 65/2003-CE

The revenue argued that the respondent violated condition 1A of Notification No. 65/2003-CE dated 06.08.2003 by not utilizing the entire Cenvat Credit available before claiming a cash refund. The respondent contended that various factors prevented them from taking the Cenvat Credit on inputs or capital goods, such as the need for duty-paying documents to accompany the goods, the goods meeting required specifications, and the genuineness of the duty-paying documents being tested. The first appellate authority found that the respondent had complied with the conditions stipulated in the notification and was eligible for the refund.

Issue 2: Restriction of Refund Claim by Adjudicating Authority

The adjudicating authority restricted the refund claim of the respondent to Rs. 60,50,093/-, arguing that the respondent had taken Cenvat Credit in December 2005 on invoices pertaining to March 2005 to November 2005 and utilized it for payment of duty in December 2005. The first appellate authority found that the respondent had fulfilled all conditions stipulated under Notification No. 39/2001-CE dated 31.07.2001 and was eligible for the full refund of Rs. 4,29,44,310/- paid through PLA. The appellate authority noted that the adjudicating authority's assumption of a closing balance of credit in November 2005 was not justified and not backed by law.

Issue 3: Decision of the First Appellate Authority

The first appellate authority allowed the re-credit of Rs. 3,68,94,217/- and disallowed Rs. 60,50,093/-, finding that the respondent had complied with the conditions of the notification and was eligible for the refund. The appellate tribunal concurred with the first appellate authority's findings, stating that the grounds of appeal raised by the department did not rebut the detailed findings and only raised technicalities. The tribunal held that the eligibility to avail Cenvat Credit of Rs. 60,50,093/- was not disputed by the revenue, and the objection to the availment of such credit in later months was incorrect. The tribunal concluded that the impugned order was correct, legal, and did not suffer from any infirmity, thereby rejecting the appeal filed by the department.

Conclusion:

The tribunal upheld the first appellate authority's decision, finding that the respondent had complied with the conditions of Notification No. 65/2003-CE and was eligible for the full refund claimed. The appeal filed by the department was rejected.