2019 (2) TMI 1843 - AT - Central Excise

Cash refund of unutilized CENVAT credit - closure of factory - denial of credit on the ground that the refund of unutilised credit is not admissible to the appellant by way of granting cash refund under the provisions of Rule 17 of Chewing Tobacco and Unmanufactured Tobacco Packing Machine Rules 2010 - HELD THAT - Issue decided in appellant own case M/S SHREE FLAVOURS LLP VERSUS CCE, DELHI 2019 (1) TMI 968 - CESTAT NEW DELHI where it was held that the appellant is entitled to refund of the Cenvat credit lying unutilised at the time of closure of their factory. The appellants are entitled to cash refund of the Cenvat credit lying unutilised at the time of closure of their factory - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claims rejection based on Cenvat credit eligibility.
2. Appellants' appeal against rejection of refund claims.
3. Legal sustainability of Cenvat credit utilization restrictions.
4. Applicability of Cenvat Credit Rules in the case.

Analysis:
1. The appellants' refund claims for unutilized Cenvat credit were rejected due to ineligibility as per Cenvat Credit Rules, 2004 and Capacity Determination Rules, 2010. The rejection was based on the grounds that cash refund of unutilized Cenvat credit was not permissible under the rules. The Commissioner (Appeals) upheld the rejection, leading to the appellants' appeal before the tribunal.

2. The appellants contended that the Commissioner (Appeals) exceeded the scope of the show cause notice and original orders while deciding the refund amount based on an 'illustration' from Form-2 of the Capacity Determination Rules, 2010. They argued that the reliance on a previous tribunal decision was misplaced. The tribunal noted a similar issue decided in the appellants' favor in a previous case, granting cash refund for unutilized Cenvat credit upon factory closure.

3. The tribunal examined the legal sustainability of restricting Cenvat credit utilization based on the rate of duty, emphasizing the provisions of Rule 63 of the Capacity Determination Rules, 2010. It was observed that the rules did not impose restrictions beyond those stated in the proviso. The tribunal cited precedents and legal interpretations to support the appellants' entitlement to the refund of unutilized Cenvat credit at the factory closure.

4. The tribunal delved into the applicability of Cenvat Credit Rules, particularly Rule 16, concerning Cenvat credit admissible on chewing tobacco in bulk packs. By analyzing relevant legal provisions and judicial decisions, the tribunal concluded that the appellants were entitled to the refund of Cenvat credit lying unutilized at the time of factory closure. The tribunal set aside the impugned orders, allowing the appeals and granting consequential benefits to the appellants as per law.