2013 (7) TMI 640 - AT - Central Excise

Rufund in cash or by way of Cenvat Credit - Appellant claimed area based exemption under Notification No. 50/2003-CE dated 10.06.2003, they were directed to reverse the cenvat credit in respect of stock of inputs, the inputs in process and inputs contained in the final product on the date of availment of the notification on 29.11.2003 - Assessee not having any credit balance in their RG-23A Part-II register, the total credit was deposited in cash on 29.11.2003 - Subsequently the appellant claimed the refund of the said cash deposited Held that - There is no dispute about the fact that the amount in question was paid back by the appellant in cash, as there was no credit available with them in RG-23A Part-II records - There is no dispute about the fact that the appellant is availing benefit of area based exemption notification and as such is not in a position to utilise the cenvat credit - There is no justification for allowing the refund by way of credit to the cenvat credit account, which is not even being maintained by the appellant - The same was paid by the appellant in cash and eligibility of refund having been finally decided in their favour, the same has to be refunded in cash Decided in favor of Assessee.

Summary

Issues:
1. Claim of area-based exemption under Notification No. 50/2003-CE dated 10.06.2003.
2. Reversal of cenvat credit by the appellant.
3. Rejection of refund claim by the original adjudicating authority.
4. Decision of Commissioner (Appeals) allowing the refund claim.
5. Challenge by Revenue before the Tribunal and High Court.
6. Crediting the refund amount in the Consumer Welfare Fund.
7. Unjust enrichment angle examined by the Assistant Commissioner.
8. Appeal by the appellant against the order of Commissioner (Appeals).
9. Dispute over refund in cash or credit to cenvat account.

Analysis:

1. The judgment involves three appeals, two by the Revenue and one by the assessee, regarding the appellant's claim of area-based exemption under Notification No. 50/2003-CE dated 10.06.2003. The appellant was directed to reverse the cenvat credit in respect of stock of inputs, inputs in process, and inputs in the final product upon availing the notification. The original adjudicating authority rejected the refund claim, leading to subsequent appeals.

2. The Commissioner (Appeals) allowed the refund claim, which was challenged by the Revenue before the Tribunal and later the High Court. The Assistant Commissioner examined the unjust enrichment aspect, considering the cash deposit made by the appellant and the subsequent utilization of the amount. The Commissioner (Appeals) and the Tribunal differed in their decisions regarding crediting the refund amount in the Consumer Welfare Fund or the cenvat credit account.

3. The High Court's decision rejecting the Revenue's appeal rendered one of the Revenue's appeals infructuous. The judgment clarified that upon opting for the exemption notification, there was no requirement to reverse the credit amount of inputs, settling the issue in favor of the assessee. The judgment also addressed the dispute over refund in cash or credit to the cenvat account for the appellant, ultimately allowing the refund in cash due to the appellant's inability to utilize the cenvat credit under the exemption.

4. The judgment concluded by rejecting two appeals of the Revenue and allowing the appeal of the appellant assessee, emphasizing the necessity to refund the amount in cash considering the circumstances of the case. The detailed analysis covered the various stages of appeal, decisions by different authorities, and the final resolution of the refund claim issue.