2015 (10) TMI 1154 - AT - Central Excise

Refund claim - Denial of refund claim - Whether CENVAT credit not reversed by the principal manufacturer in respect of the inputs sent to the job worker and the latter not taken credit thereof shall entitle the principal manufacturer to the refund of any amount paid at a subsequent date without reversing the CENVAT credit on the date of dispatch of the input to the job worker - Held that - law having prescribed that reversal of CENVAT credit by principal manufacturer is requirement when the goods are sent to job worker failing to do so, the appellant is required to deposit the penalty. Therefore, penalty of ₹ 5,000/- imposed by learned adjudicating authority is confirmed. - Without reversal when the appellant has enjoyed the CENVAT credit it is liable to interest thereon till payment by challan what that is averred. It appears that due to confusion of the position of law, there was no reversal and subsequent payment was made. Therefore, neither appellant will ask any interest nor the respondent shall ask any interest from Revenue. Respondent is entitled to the refund - Decided in favour of assessee.

Summary

Issues:
Whether the principal manufacturer is entitled to a refund of any amount paid without reversing the CENVAT credit on the date of dispatch of inputs to the job worker.

Analysis:
The judgment addresses the issue of whether a principal manufacturer can claim a refund of any amount paid without reversing the CENVAT credit when sending inputs to a job worker. It is noted that there was no dispute regarding the reversal of CENVAT credit on the input issued to the job worker as required by law. The respondent utilized the CENVAT credit even though it was reversible upon dispatch to the job worker. Upon demand, the equivalent amount of CENVAT credit was deposited by the respondent and appropriated against the demand amount. The law mandates the reversal of CENVAT credit by the principal manufacturer when goods are sent to a job worker, and failure to do so results in a penalty. Therefore, the penalty imposed by the adjudicating authority was confirmed at Rs. 5,000.

The judgment further discusses the liability of interest when the appellant enjoys the CENVAT credit without reversal. In this case, due to confusion regarding the law, there was no reversal initially, and subsequent payment was made. It is determined that neither the appellant nor the respondent can claim interest from the Revenue. The respondent is entitled to a refund of the deposited amount of Rs. 10,79,018 without interest, considering the peculiar facts and circumstances of the case. The order clarifies that it shall not serve as a precedent and is specific to the facts and circumstances of this case.

In conclusion, the order modifies the Commissioner (Appeals) decision and disposes of the matter. The judgment emphasizes that the decision is based on the specific facts and circumstances presented in this case and should not be considered a precedent for future cases.