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2011 (6) TMI 531 - AT - Central ExciseCenvat credit refund Held that - in the case of Slovak India Trading Co. Pvt. Ltd. (2006 - TMI - 606 - HIGH COURT OF KARNATAKA (BANGALORE) - Central Excise) refund particularly allowed in the light of the closure of the factory and in the light of the assessee coming out of the Modvat Scheme. refund claim lying unutilized accumulated on 09.07.2004 which is not involved inputs work-in process or finished goods lying in stock in 2004. The matter is remanded back to the adjudicating authority to examine the fact whether the appellant has reversed the CENVAT credit involved on inputs work-in process and finished stock lying on 09.07.2004. appeal is allowed.
Issues:
1. Rejection of refund claim by lower authorities. 2. Applicability of Rule 11(3) of CENVAT Credit Rules, 2004. 3. Maintainability of refund claim under Rule 5 of CENVAT Credit Rules, 2004. Analysis: Issue 1: Rejection of refund claim by lower authorities The appellant, a manufacturer of yarn and textile, filed an appeal against the rejection of their refund claim. The claim was based on unutilized accumulated CENVAT credit balance, which was denied by both lower authorities. The appellant argued that they were eligible for the refund under Rule 5 of the CENVAT Credit Rules, 2004, as they had opted for exemption from duty as per government policy. The lower authorities rejected the claim citing lack of evidence of goods export. The appellant contended that the rules in question were not applicable to their case as they opted out of the modvat scheme before the rules came into effect. The appellant relied on various legal precedents to support their claim. Issue 2: Applicability of Rule 11(3) of CENVAT Credit Rules, 2004 The question arose whether Rule 11(3) of the CENVAT credit rules applied to the appellant's case. The Tribunal noted that these provisions were not in effect when the appellant opted out of the modvat scheme. The Tribunal referenced a judgment by the Hon'ble Karnataka High Court, which was affirmed by the apex court, to support the view that Rule 5 was applicable to the appellant's situation. The Tribunal emphasized that there was no manufacture due to the closure of the company, and Rule 5 did not have an express prohibition in such cases. Consequently, the Tribunal allowed the refund claim, directing the adjudicating authority to verify if the appellant had reversed the CENVAT credit on inputs and finished goods. Issue 3: Maintainability of refund claim under Rule 5 of CENVAT Credit Rules, 2004 The Tribunal, following the legal precedent, allowed the refund claim of unutilized accumulated CENVAT credit. The appellant's claim was deemed maintainable under Rule 5 of the CENVAT Credit Rules, 2004, despite the contentions of the Revenue. The Tribunal directed the adjudicating authority to ensure the reversal of CENVAT credit on inputs and finished goods before sanctioning the refund. The appeal was allowed, with the refund claim to be processed within one month of the order. Cross objections were also disposed of accordingly.
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