2017 (10) TMI 1356 - AT - Central Excise

Refund of unutilized CENVAT Credit - closure of factory - Whether the lower authorities have correctly considered the law, for rejection of the refund claim filed by the appellant in respect of accumulated credits which could not be utilized due to closure of the appellant s unit? Held that - The judgement of the Hon ble High Court of Karnataka in the case of Slovak India Trading Co. 2006 (7) TMI 9 - KARNATAKA HIGH COURT , on the issue, will support the case of appellant being an identical issue, where it was held that Refund of credit is admissible, when there was no manufacture in the light of closure of factory and he has come out of Modvat scheme - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Consideration of law for rejection of refund claim due to closure of appellant's unit under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad was directed against Order-in-appeal No. RAJ-EXCUS-000-APP-258-14-15 dated 30/01/2015. The main issue for consideration was whether the lower authorities correctly applied the law in rejecting the refund claim filed by the appellant concerning accumulated credits that could not be utilized due to the closure of the appellant's unit.

The appellant had relied on the judgments of Hon'ble Gujarat High Court and a decision of the Tribunal in a similar case to support their claim. Both lower authorities had rejected the refund claim citing that Rule 5 of Cenvat Credit Rules, 2004 did not allow for the refund of unutilized amounts in the Cenvat Account due to unit closure. The Departmental Representative supported this stance by referring to previous Tribunal decisions where refunds were denied in similar circumstances.

However, the Member of the Tribunal noted that a similar issue had been addressed previously by the Tribunal in the case of Shalu Synthetics P. Ltd., where a refund was allowed. The Departmental Representative mentioned that the case of Shalu Synthetics P. Ltd. was under appeal before the Hon'ble High Court of Gujarat. The Member, after considering judgments from the Hon'ble High Court of Karnataka and the Hon'ble High Court of Bombay, found that these judgments supported the appellant's case. Since the Tribunal's decision was pending before the High Court and the High Courts had taken a view in favor of the appellant, the impugned order was set aside, and the appeal was allowed.

In conclusion, the Tribunal set aside the lower authorities' decision and allowed the appeal, citing the support from relevant legal precedents and pending appeals before the High Court in similar cases.