2014 (2) TMI 349 - AT - Central Excise

Refund of CENVAT Credit - export of yarn - Maintenance of separate credit accounts in respect of Basic Excise Duty (BED) as also in respect of Additional Excise Duty (AED) leviable under Additional Excise Duty (Textile and Textile Articles) Act, 1978 - Held that - Commissioner (Appeals) is otherwise not opposed to the idea of maintenance of a common CENVAT credit account of BED as also AED. If the appellant would have maintained a common account, they would have debited the said common account for the entire refunded amount of ₹ 87.10 lakhs. It is not disputed that as per the provisions of Rule 3, Sub-rule 4, the CENVAT Credit availed by an assessee either in respect of BED or in respect of AED can be utilised for payment of any duty of excise on any final product. As such, it is clear that BED and AED could have been utilised for payment of each other - The said manner which stands pleaded, by the appellant is not against the provisions of Rule 3(4) of CENVAT Credit Rules, 2004 and as such I find that in as much as BED and AED could have been utilised inter-challengeably, action of the lower authorities cannot be held to be justifiable. Accordingly, the impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Refund of CENVAT credit for export of yarn.
2. Maintenance of separate credit accounts for Basic Excise Duty and Additional Excise Duty.
3. Dispute over the sanction of refund claim for Additional Excise Duty.

Analysis:
1. The appellant, an exporter of yarn, sought a refund of CENVAT credit for inputs used in manufacturing yarn for export. The Asst. Commissioner approved a refund of Rs.87,10,153, to be given in cash, requiring debit entries in the CENVAT credit accounts.

2. The appellant maintained separate credit accounts for Basic Excise Duty (BED) and Additional Excise Duty (AED) under the relevant Act. The dispute arose as the appellant debited Rs.75.74 lakhs from the BED account, but the refund claim of Rs.11.36 lakhs for AED was questioned.

3. The lower authorities considered the AED refund erroneous due to insufficient balance in the AED account, even though the appellant debited the available balance and the remaining from the BED account. The Commissioner (Appeals) upheld the decision, stating that maintaining separate accounts led to the denial of the refund.

4. The Commissioner (Appeals) acknowledged that a common CENVAT credit account for BED and AED would have allowed the appellant to utilize the surplus BED to pay AED. The appellant's contention of utilizing BED for AED payment to save the AED refund had merit, as Rule 3(4) permits interchangeability of BED and AED for excise duty payment.

5. The appellate tribunal found that the appellant's plea for maintaining a common credit account was not against the rules and that the lower authorities' decision was unjustifiable. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, granting consequential relief.

This judgment clarifies the entitlement to CENVAT credit refund for exports, the permissibility of maintaining consolidated credit accounts, and the correct utilization of credit for different excise duties, emphasizing compliance with the CENVAT Credit Rules, 2004.