2012 (12) TMI 306 - AT - Central Excise

Claim of Refund of Cenvat Credit - Surrender of Central Excise Registration - closure of factory - unutilised credit - held that - Refund results in outflow from treasury, which needs sanction of law and an order of refund for such purpose is sine qua non - absence of express grant in statute does not imply ipso facto entitlement to refund - absence of express grant is an implied bar for refund. When right to refund does not accrue under law, claim thereof is inconceivable - answered negatively and in favour of Revenue since refund of unutilized credit is only permissible in case of export of goods and for no other reason whatsoever that may be

Summary

Issues:
Claim for refund of cumulated unutilised credit under Central Excise registration.

Analysis:
The appellant surrendered their Central Excise registration with a Cenvat credit balance of Rs.9,17,190, claiming a refund due to the closure of their factory and inability to utilize the credit. After a show cause notice and adjudication, the refund claim was rejected by the original authority and upheld by the Commissioner (Appeals) citing the absence of a provision for refund of unutilized credit. The appeal was made to challenge this decision.

During the hearing, both sides presented arguments supported by various Tribunal decisions and court judgments. However, the case referred to a Larger Bench decision in the matter of M/s. Steel Strips and others, where it was concluded that the Modvat law does not expressly permit the refund of unadjusted amounts, except in the case of exports. The absence of a specific provision for refund in the statute implies a bar to such refunds, except in cases of exported goods. The decision emphasized that the right to refund does not accrue under the law unless explicitly stated, and thus, the claim for refund of unutilized credit was deemed impermissible, except in the case of exports.

Based on the Larger Bench decision's rationale, the presiding judge, Ms. Archana Wadhwa, found no merit in the appellant's claim for a refund of unutilized credit under Central Excise registration. The appeal was consequently rejected, and the judgment was pronounced on 9th November 2012.