2012 (12) TMI 258 - AT - Central Excise

Refund claim - unutilized Cenvat credit of Additional Excise Duty Held that - the appellant seeks cash refund of unutilised AED (T & TA)) credit i.e. credit to personal ledger account (PCA) on the ground that the same has been accumulated on account of wrong instruction of the Department refraining them from utilising this credit for payment of AED (GSI) and thereby compelling them to pay the AED (GSI) leviable on their final products through PLA. However, since undisputedly on account of taking over of the unit by M/s. Harshit Textile Pvt. Ltd., the unutilized AED (T &TA) credit has been transferred in favour of M/s. Harshit Textiles Pvt. Ltd., there is no question of refund of this credit to the appellant. Their plea for cash refund of this credit to M/s. Harshit Textiles cannot be entertained as no such request has been made by M/s. Harshit Textiles before the lower authorities. - in favour of Revenue

Summary

Issues:
1. Refund claim for unutilized Cenvat credit of Additional Excise Duty (T & TA).
2. Rejection of refund claim by the adjudicating authority.
3. Appeal against the order of the adjudicating authority disallowed by the Commissioner (Appeals).
4. Entitlement to cash refund of excise duty paid due to Department's order.
5. Transfer of unutilized credit to the transferee unit.
6. Permissibility of cash refund of accumulated credit under Section 11B of the Central Excise Act, 1944.

Analysis:
1. The appellant, a manufacturer of woollen fabrics, filed a refund claim for unutilized Cenvat credit of Additional Excise Duty (T & TA) due to Department's directions. The claim was based on a favorable CESTAT decision regarding credit utilization. The notice for rejection cited non-compliance with Section 11B and time-barred submission of evidence.

2. The adjudicating authority rejected the refund claim, emphasizing the transfer of the unit to another entity and the absence of unutilized credit in the appellant's name. The Commissioner (Appeals) upheld the rejection, noting the transfer of credit to the new owner and the lack of grounds for refund.

3. The appellant challenged the rejection, arguing that the Department's order prevented them from adjusting the credit, leading to cash payments. They sought refund or transfer of the amount to the new owner. The AR contended that refunding accumulated credit was impermissible under Section 11B due to the unit sale and credit transfer.

4. The Tribunal considered the appellant's plea for cash refund of unutilized credit, transferred to the new owner, and cited a precedent on refunding unadjusted Modvat credit. The Tribunal concluded that refunding unutilized credit, except for export cases, required a statutory provision and was not permissible otherwise.

5. Given the transfer of unutilized credit to the new owner and the absence of a request for cash refund by them, the Tribunal dismissed the appeal. The decision highlighted the legal constraints on refunding accumulated credit and the specific conditions under which such refunds are permissible, emphasizing the statutory framework governing such refunds.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by the parties, and the legal principles guiding the decision-making process of the Tribunal.