2010 (8) TMI 330 - AT - Central Excise

Refund Cash refund of duty paid from Cenvat Credit account - factory had closed down and the registration certificate had been surrendered - no prohibition either in the Central Excise Act and in the Rules made thereunder that refund of duty paid through Cenvat credit account cannot be made in cash - Section 11B of Central Excise Act 1944 providing for refund of duty does not make any distinction between the duty paid in cash i.e. through PLA and the duty paid through Cenvat Credit account - no dispute about the fact that when the duty was paid through Cenvat credit account the unit was functioning and by the time the matter was decided by the Tribunal partly in the favour of the respondent which resulted in refund and the refund was sanctioned the unit had closed down and even the registration certificate had been surrendered no merit in the Revenue s appeal Appeal dismissed

Summary

Issues:
1. Whether refund of duty paid through Cenvat credit account can be made in cash when the factory has closed down and the registration certificate surrendered.

Analysis:
1. The case involved a dispute regarding the refund of duty initially paid through Cenvat credit account in cash after the factory had closed down and the registration certificate was surrendered. The Revenue appealed against the order of the Commissioner (Appeals) who had allowed the refund in cash. The Revenue argued that the refund should have been made through Cenvat credit as the duty was paid during the pendency of the appeal without instructions from the department. The Revenue cited a Tribunal judgment in support of their contention.

2. The respondent, on the other hand, argued that there was no provision prohibiting the refund in cash and relied on Tribunal judgments supporting their stance. They emphasized that since the factory had closed down and the registration certificate was surrendered by the time the duty became refundable, cash refund was necessary as they could not utilize the Cenvat credit.

3. The Tribunal analyzed the situation and found that there was no statutory prohibition on refunding duty paid through Cenvat credit account in cash. The Tribunal referred to Section 11B of the Central Excise Act, stating that it does not differentiate between duty paid in cash or through Cenvat Credit account. The Tribunal also cited precedents where refunds were allowed in cash when the factory had closed down and no Cenvat credit account was available. The Tribunal distinguished the case from the judgment cited by the Revenue, emphasizing that in this case, the factory was operational when the duty was paid through Cenvat credit, and the closure happened later, justifying the cash refund.

4. Ultimately, the Tribunal dismissed the Revenue's appeal, stating that there was no merit in their argument. The Tribunal held that in the given circumstances where the factory had closed down and the registration certificate was surrendered, refunding the duty in cash was appropriate as there was no Cenvat credit account available for the respondent. The Tribunal's decision was based on the specific facts of the case and the applicable legal provisions, concluding that the cash refund was justified in this situation.