2016 (6) TMI 314 - AT - Central Excise

Eligibility for cash refunds of untilized credit - credit could not be unutilized 16 years back due to dispute with the department - appellant is now an SSI unit and their clearance are very much within the limits prescribed under the SSI. - credit under transitional provisions - Rule 57H of erstwhile CER 1944 - Held that - it is very clear that the appellants were prevented from taking of credit due to the objections from the department and the contention of the appellant that had the department granted refund in the year 1994 itself, the appellant would not have made the payment by cash from the PLA and due to the dispute being not settled for 16 years, the appellant cannot be denied of their benefit to cash refund. The appellant is now an SSI unit and their clearance are very much within the limits prescribed under the SSI. The ratio of decision of Karnataka High Court in the case of UOI Vs Slovak India Trading Co. Pvt. Ltd. 2006 (7) TMI 9 - HIGH COURT OF KARNATAKA (BANGALORE) which has been upheld by the Supreme Court in UOI Vs Slovak India Trading Co. Pvt. Ltd. 2007 (1) TMI 556 - SUPREME COURT supports the appellant s contention that they are eligible for cash refund as it was not due to appellant s fault or lapse in availing the credit. Had the department not objected to their availment, their need to have paid the amounts through PLA would have been drastically reduced. The authorities below have lost sight of the fact that cenvat credit is a beneficial legislation and disputes such as the one if allowed to continue would deprive the assessees, as in the instant case. Therefore, the appellant is entitled to cash refund. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Dispute over availment of credit for specific periods.
2. Denial of credit and recovery orders.
3. Appeal against denial of refund claim.
4. Appellant's argument for cash refund eligibility.
5. Department's contention against refund claim.
6. Decision on appellant's eligibility for cash refund.

Issue 1 - Dispute over Availment of Credit:
The case involved a dispute regarding the availment of credit by M/s. Leo Oils & Lubricants for specific periods. The appellate tribunal decided in favor of the Appellant regarding the availability of MODVAT credit based on endorsed invoices/gate passes. The Commissioner directed verification to ensure no one else had availed the credit.

Issue 2 - Denial of Credit and Recovery Orders:
The Assistant Commissioner denied credit of specific amounts and ordered recovery of outstanding dues. The issue was contested at various levels, resulting in different decisions. The lower authority denied a part of the credit and allowed adjustment against previous demands.

Issue 3 - Appeal Against Denial of Refund Claim:
The Commissioner of Central Excise upheld the lower authority's decision denying the refund claim under specific rules. The appellant contested this decision, arguing that they were prevented from availing transitional credit due to departmental objections.

Issue 4 - Appellant's Argument for Cash Refund Eligibility:
The appellant's representatives argued that the authorities had proceeded mechanically and highlighted the appellant's payments from their PLA over the years. They contended that had the department granted the refund earlier, the need for cash payments would not have arisen.

Issue 5 - Department's Contention Against Refund Claim:
The Revenue argued against the refund claim, stating that the credit was availed on ineligible documents and that the appellant's reliance on specific judgments was not applicable to the current situation. They emphasized that the credit was utilized or would lapse as per relevant rules.

Issue 6 - Decision on Appellant's Eligibility for Cash Refund:
After hearing both sides, the tribunal considered whether the appellant was eligible for a cash refund under transitional provisions. The tribunal noted that the appellant was prevented from taking credit due to departmental objections and ultimately ruled in favor of the appellant for cash refund eligibility based on legal precedents and the beneficial nature of cenvat credit legislation.

In conclusion, the judgment addressed various issues related to credit availment disputes, denial of credit, refund claims, and eligibility for cash refunds. The tribunal's decision favored the appellant in terms of cash refund eligibility, highlighting the impact of departmental objections on credit availment and the beneficial nature of cenvat credit provisions.