2011 (11) TMI 549 - AT - Central Excise

Waiver of pre deposit - Denial of refund claim - Unutilized CENVAT Credit - Held that - initially the appellant had exported the goods under claim for rebate and later on they paid back the rebate taken along with interest. They also availed Cenvat credit for an equivalent amount in their Cenvat account. Thereafter, they applied for refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The jurisdictional Assistant Commissioner after observing that they are unable to utilise the Cenvat credit during the relevant quarter in which the accumulation took place allowed them refund of the accumulated Cenvat credit in terms of Rule 5 of the Cenvat Credit Rules. Thus, we find that there is no infirmity in the order passed by the original Adjudicating Authority with regard to sanction of refund claim of accumulated Cenvat credit in respect of goods exported under Rule 5 of the Cenvat Credit Rules, 2004. Thus, the appellant had made out a prima facie case against impugned order - Stay granted.

Summary

Issues:
Refund claims under Rule 5 of Cenvat Credit Rules, 2004 for unutilized credit on exported goods.

Analysis:
The case involved three appeals and stay applications challenging the Order passed by the Commissioner of Central Excise (Appeals), Mumbai. The appellant, a manufacturing company, filed refund claims under Rule 5 of Cenvat Credit Rules, 2004 for unutilized Cenvat credit on inputs used in goods exported during April 2008 to June 2008. The Revenue appealed, arguing against the refund on various grounds, including the accumulation of credit due to higher input duty rates, limited export quantities, and the interpretation of relevant notifications. The Revenue also cited a previous CESTAT order regarding the interpretation of the phrase "immediately on receipt of the inputs" in relation to credit availment delays. The Commissioner (Appeals) ruled in favor of the Revenue, leading to the appeals before the Appellate Tribunal.

The appellant contended that they initially exported goods under one procedure, claimed and received duty rebates, then switched procedures and repaid the rebates with interest. Subsequently, they availed Cenvat credit equal to the repaid amount but could not utilize it, seeking a refund under Rule 5. The appellant argued that compliance with conditions allowed for alternate benefits, emphasizing that there was no time limit for credit availment under the Cenvat Credit Rules. The Revenue, represented by the Additional Commissioner, supported the lower Appellate Authority's findings.

Upon careful consideration, the Tribunal found that the appellant had complied with conditions for refund under Rule 5 after repaying duty rebates and availing Cenvat credit. The Assistant Commissioner had correctly granted the refund based on the inability to utilize the credit during the relevant quarter. The Tribunal concluded that the original Adjudicating Authority's decision to sanction the refund was valid, indicating no flaws in the process. Consequently, the Tribunal granted unconditional waiver of pre-deposit for the refunded Cenvat Credit and stayed recovery during the appeal proceedings.