2011 (6) TMI 530 - AT - Central Excise

Refund of pre-deposit in cash Held that - appellant is not having their CENVAT credit account as they have opted out from Modvat scheme on 09.07.2004 therefore appellant is entitled for refund of pre-deposit in cash. Appeal is allowed. - Ashok ARC (2005 - TMI - 47537 - HIGH COURT OF JHARKHAND AT RANCHI - Central Excise)

Summary

Issues involved:
1. Refund of pre-deposit made in CENVAT credit account.
2. Entitlement for refund in cash after opting out of MODVAT scheme.
3. Interpretation of relevant case laws for refund procedure.

Analysis:
1. The appellant filed an appeal against an order denying refund of pre-deposit made in their CENVAT credit account, which they were unable to utilize after opting out of the MODVAT scheme. The Tribunal directed the pre-deposit, which was made from the CENVAT credit account, to be refunded. The appellant claimed the refund in cash due to their non-utilization of the CENVAT credit account post opting out of the scheme. The adjudicating authority sanctioned the refund but ordered it to be utilized through the CENVAT credit account, leading to an appeal by the appellant. The appellant contended that they were entitled to the refund in cash as per relevant case laws, citing the decision of Voltas Ltd. v. Union of India and other cases to support their argument.

2. The issue at hand was whether the appellant should receive the refund of the pre-deposit through their CENVAT credit account or in cash. The appellant argued that their inability to utilize the CENVAT credit account post opting out of the MODVAT scheme warranted the refund in cash. The Departmental Representative, on the other hand, insisted that since the pre-deposit was made from the CENVAT credit account, the refund should also be made through the same account. The Tribunal, after considering the submissions, referred to relevant case laws such as Rollatainers Ltd. v. CCE Jaipur and National Leather Cloth Mfg. Co. v. CCE Mumbai to analyze the situation. The Tribunal ultimately relied on the decision in Ashok ARC case, where it was held that if an assessee is not in a position to utilize the credit due to certain circumstances, the refund should be made in cash. Therefore, considering the appellant's situation of opting out of the MODVAT scheme and not maintaining a CENVAT credit account, the Tribunal directed the adjudicating authority to refund the pre-deposit in cash within 30 days.

3. The Tribunal extensively analyzed the case laws cited by both parties to determine the appropriate mode of refund for the pre-deposit. The decision in the Voltas Ltd. case established the appellant's entitlement to the refund of the pre-deposit amount in case the impugned order was set aside by way of remand. The Tribunal distinguished the Rollatainers Ltd. case as it did not align with the facts of the present case, where the appellant was unable to utilize the pre-deposit through their CENVAT credit account after opting out of the MODVAT scheme. Additionally, the Tribunal referenced the National Leather Cloth Mfg. Co. case, where a dismissal was based on the appeal amount being less than a certain threshold, indicating its inapplicability to the current scenario. By drawing parallels with the Ashok ARC case, the Tribunal concluded that the appellant's lack of a CENVAT credit account post opting out of the scheme justified the refund in cash, as ruled by the Jharkhand High Court. The judgment allowed the appeal and directed the refund to be made in cash, providing consequential relief.