2007 (1) TMI 605 - AT - Central Excise

Summary

Issues involved: Whether the appellants are entitled to claim the refund of accumulated Cenvat credit by way of cash in respect of the inputs against the exported goods.

Summary:

Issue 1: Refund of accumulated Cenvat credit

The appellants filed refund claims under Rule 5 of the Cenvat Credit Rules, 2002, citing inability to utilize accumulated credit due to low clearance for home consumption compared to clearance to EOU without duty payment. The adjudicating authority rejected the claims, noting non-fulfillment of Rule 5 and export clearances without duty payment. The Commissioner (Appeals) upheld the rejection, emphasizing the appellants' failure to justify non-utilization of credit and the ongoing nature of home clearances. The appellants argued impossibility of credit utilization and cited precedents supporting refund in cash. The Tribunal found in favor of the appellants, citing relevant judgments and ruling that refund must be granted when credit cannot be adjusted due to duty-free exports.

Issue 2: Application of legal precedents

The appellants relied on judgments related to deemed credit under specific notifications and similarities between different rules. They also referenced a recent case emphasizing the right to refund under Rule 5, regardless of the reason for non-adjustment. The Tribunal agreed with the appellants, stating that authorities erred in denying the refund claim, as the credit could not be adjusted for duty-free exports. The decision was based on the clear wording of Rule 5 and the inability to adjust credit in such circumstances. The Tribunal allowed the appeals and set aside the previous orders, providing consequential relief to the appellants.