2014 (4) TMI 187 - AT - Central Excise

Refund Appellant demanded for refund was in respect of Cenvat credit of AED on the ground that they consumed raw material purchased for the manufacture of excisable goods exported on payment of duty - Held that - cenvat credit of AED(T&TA) accumulated on account of the final exported product being not leviable to the same is required to be refunded in terms of Rule 5 of Cenvat Credit Rules - Following decision of COMMISSIONER OF C. EX., ROHTAK Versus INDO DANE TEXTILE INDUSTRIES 2007 (2) TMI 77 - CESTAT, NEW DELHI - Decided in favour of assessee.

Summary

Issues:
Refund of accumulated Cenvat credit on Additional Excise Duty (Textile and Textile Articles) (AED(T&TA)) paid on cotton yarn used in manufacturing exported Terry Towels.

Analysis:
The judgment addresses the issue of refunding accumulated Cenvat credit on AED(T&TA) paid on cotton yarn used in manufacturing Terry Towels for export. The appellants filed a refund claim for Basic Excise Duty and AED(T&TA) accumulated Cenvat credit. While there was no dispute regarding the refund of basic excise duty credit, the Revenue contested the refund of AED(T&TA) credit, claiming it was not available as there was no AED(T&TA) on the final exported product. The Assistant Commissioner initially rejected the credit, but a subsequent show cause notice led to an order by the Additional Commissioner demanding recovery, upheld by the Commissioner (Appeals), prompting the present appeal.

The Tribunal relied on its previous decision in the case of CCE Vs. Indo Dane Textile Industries, which was upheld by the Hon'ble Punjab & Haryana High Court. Another decision in the case of Sutlej Industries Ltd Vs CCE Vapi supported the same stance. These decisions established that the Cenvat credit of AED(T&TA) accumulated due to the final exported product not being subject to the duty must be refunded under Rule 5 of the Cenvat Credit Rules.

Furthermore, a circular issued by the Board clarified that the refund of AED(T&TA) is permissible in such scenarios, with retrospective effect as per the case of CCE Thane Vs D.C. Polyester Pvt Ltd. In light of these precedents and the Board's clarification, the impugned order was set aside, and the appeal was allowed, granting consequential relief to the appellants. The judgment emphasizes the entitlement to the refund of accumulated Cenvat credit on AED(T&TA) in line with the applicable rules and legal interpretations, ultimately ruling in favor of the appellants based on established precedents and regulatory clarifications.