2016 (1) TMI 1318 - AT - Central Excise

Refund of unutilized CENVAT credit - clearance of goods for export - Rule 5 of the CCR 2004 - N/N. 30/2004-CE dtd 9.7.2004 - Held that - the refund of the unutilised Cenvat Credit is not arising out of the export of the goods - refund not allowed - appeal dismissed - decided against appellant.

Summary

Issues Involved:
Interpretation of Rule 5 of the Cenvat Credit Rules 2004 for cash refund of accumulated Cenvat credit; Applicability of conditions for cash refund under Rule 5; Comparison of judicial precedents regarding cash refund of Cenvat credit; Determination of eligibility for cash refund of unutilized Cenvat credit.

Analysis:
The judgment involved a common issue regarding the interpretation and application of Rule 5 of the Cenvat Credit Rules 2004 for cash refund of accumulated Cenvat credit. The appellants, engaged in the manufacture of Texturised Yarn, opted for the benefit of exemption under Notification No. 30/2004-CE dated 9.7.2004, which restricted them from availing Cenvat Credit on inputs. The appellants filed refund claims for the unutilized balance of Cenvat Credit under Rule 5 of the Cenvat Credit Rules 2004.

The authorities below had observed that Rule 5 would be applicable concerning the clearance of goods for export. The appellants argued that the issue was covered by the decision of the Hon'ble Karnataka High Court and the Supreme Court, as well as a Tribunal decision. On the contrary, the Authorized Representative for the Revenue cited a Larger Bench decision and another Tribunal decision favoring the Revenue's stance on the issue.

The Tribunal analyzed the submissions and records, emphasizing that Section 11B did not apply to cash refund of unutilized Cenvat credit at the time of factory closure. The judgment highlighted that Rule 5 of the Cenvat Credit Rules allowed cash refund of accumulated credit only under specific conditions related to exports, none of which were satisfied in the present case. Therefore, the Commissioner (Appeals) rightly upheld the rejection of cash refund of the accumulated credit, supported by a Larger Bench judgment.

Consequently, the Tribunal found that the refund of unutilized Cenvat Credit did not stem from the export of goods, leading to the rejection of both appeals filed by the appellants. The judgment concluded that since the conditions under Rule 5 were not met, there was no basis for granting the cash refund of the unutilized Cenvat Credit.