2013 (8) TMI 771 - AT - Central Excise

Refund Claim of Differential Amount by way of CENVAT credit - Whether the refund of duty initially paid through Cenvat credit account can be made in cash in a situation when by the time the duty amount had become refundable, the assessee s factory had closed down and the registration certificate had been surrendered - Held that - lower authorities were directed to refund the amount in cash to the appellant-assessee as the factory was closed following the judgement of COMMISSIONER OF C. EX., JALANDHAR Versus KOCHAR SUNG-UP ACRYLIC LTD 2010 (8) TMI 330 - CESTAT, NEW DELHI - There was no dispute about the fact that when the duty was paid through Cenvat credit account, the unit was functioning and by the time the matter was decided by the Tribunal partly in the favour of the respondent, which resulted in refund and the refund was sanctioned - the unit had closed down and even the registration certificate had been surrendered assessee is eligible to receive the refund in cash - Decided in favor of assesse.

Summary

Issues:
1. Refund claim beyond the period of limitation.
2. Eligibility for refund in cash due to factory closure.
3. Whether refund can be given in cash when duty was paid through CENVAT credit account.

Analysis:
1. The appellant filed a refund claim beyond the period of limitation, which was sanctioned by the adjudicating authority. The Revenue appealed against this decision, but the first appellate authority upheld the refund claim, leading to the Revenue's further appeal.

2. The appellant contended that the first appellate authority did not consider their request for a cash refund, citing factory closure. They submitted relevant documents, including surrender of registration certificate and communication of factory closure, to support their claim for a cash refund. The appellant relied on a Tribunal decision for the proposition that if a factory is closed and a refund is due, it should be paid in cash.

3. The Tribunal analyzed whether a refund can be granted in cash when duty was initially paid through a CENVAT credit account and the factory subsequently closed down. The Tribunal noted that there is no legal prohibition on refunding duty paid through CENVAT credit in cash. The Tribunal cited precedents to support the view that if a factory closes and there is no CENVAT credit account, refunding through credit would be meaningless. The Tribunal distinguished a previous case where the refund was disallowed in cash as the CENVAT credit entry was made after the factory closure. In this case, the Tribunal found merit in the appellant's argument for a cash refund due to factory closure and directed the lower authorities to refund the amount in cash.

4. The Tribunal's decision established that the appellant is entitled to a cash refund due to factory closure, as settled law. The appeal was disposed of accordingly.