2016 (2) TMI 1135 - AT - Central Excise

Refund of unutilised CENVAT credit - appellant failed to carry out exports - applicability of Rule 5 of Cenvat Credit Rules, 2004 - Held that - When law itself does not deny grant of refund of unutilised credit there shall be no question of limitation to apply - reliance placed in thew case of 2011 (9) TMI 964 - ANDHRA PRADESH HIGH COURT 2011 (9) TMI 964 - ANDHRA PRADESH HIGH COURT , where it was held that the Rule entitles the manufacturer to refund of the Cenvat Credit where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification - appeal allowed.

Summary

Issues: Refund of unutilized credit on account of Additional Duty of Excise due to exemption on textile goods.

Analysis:
1. The appellant claimed a refund of unutilized credit on account of Additional Duty of Excise (AED) due to the exemption granted on textile goods. The appellant argued that since there was no levy of AED on textile goods, the credit became impossible to be utilized. The appellant contended that without any notification depriving them of the credit, the only way to enable them to avail the credit was through a refund under Rule 5 of Cenvat Credit Rules, 2004. The appellant relied on a decision of the Hon'ble High Court of Andhra Pradesh to support their claim (Para 1.1).

2. The departmental representative opposed the refund, stating that since the appellant did not carry out any export, the refund under Rule 5 of Cenvat Credit Rules, 2004 could not be granted based on unutilized credit. Additionally, it was argued that AED is specifically earmarked to be utilized against the liability of AED, and upon the cessation of this liability, the appellant was not automatically entitled to a refund (Para 2).

3. After hearing both sides and examining the records, the Tribunal considered the appellant's argument that in the absence of any provision in the law to deny a refund and with the right not being abrogated by law, the unutilized credit of AED should be refundable. Citing the precedent set by the Hon'ble High Court of Andhra Pradesh, the Tribunal concluded that the appellant was entitled to the refund. The Tribunal emphasized that since the law did not prohibit the grant of a refund for unutilized credit, there was no limitation to apply, and therefore, the appeal was allowed (Para 4).