2014 (7) TMI 352 - AT - Central Excise

Refund of CENVAT Credit - export of goods - earlier credit was reversed treating the goods as exempt - claim of refund filed after decision of tribunal held that supply of Indian Navy is export - Held that - appellant is an exporter and the said CENVAT credit is accumulated in the CENVAT credit account due to the exports only. It is also a fact on record that the factory is closed therefore, the appellant is not able to utilize the amount lying in the CENVAT credit account. Accordingly, as per the Circular cited above, the appellant is entitled to take the amount in cash. Therefore, I direct the concerned authorities to issue the refund in cash to the appellant. - Decided in favour of assessee.

Summary

Issues:
- Appeal against the impugned order denying sanctioned refund amount in cash.
- Dispute over maintaining separate accounts for exempted and dutiable final products.
- Applicability of Circular No. 220/54/96-CX on refund claims.
- Factory closure affecting CENVAT credit account utilization.

Analysis:

The judgment involved an appeal against the denial of a sanctioned refund amount in cash to the appellant. The appellant, a battery manufacturer exporting goods, faced a situation where an order was canceled by a foreign buyer, and the goods were supplied to the Indian Navy, exempted from excise duty. The Revenue contended that due to the lack of separate accounts for exempted and dutiable products, the appellant should reverse 8% of the value of exempted goods. During the investigation, the appellant paid amounts through CENVAT credit account. The Tribunal ruled in favor of the appellant, stating that since they had already reversed input credit for the clearance to the Indian Navy, they were not required to pay the 8% amount. A refund of a specific sum was to be given, leading to the current appeal.

The main contention revolved around the mode of refund payment. The appellant argued that due to factory closure, they could not maintain a CENVAT account and thus the refund should be in cash as per Circular No. 220/54/96-CX. On the other hand, the Revenue insisted that the refunded amount should go back to the CENVAT credit account since the appellant had reversed the necessary amount. The Tribunal examined the Circular, highlighting that cash refund of unutilized Modvat credit was crucial for manufacturers and exporters to remain competitive internationally. Considering the appellant's exporter status and the closure of their factory hindering CENVAT credit utilization, the Tribunal concluded that the appellant was entitled to receive the refund in cash.

In conclusion, the Tribunal directed the concerned authorities to issue the refund in cash to the appellant, emphasizing the applicability of Circular No. 220/54/96-CX in facilitating cash refunds for unutilized credit, especially in cases where factory closure hampers credit account utilization. The judgment provided clarity on the entitlement of exporters to cash refunds under specific circumstances, ensuring competitiveness in the international market.