2016 (6) TMI 316 - AT - Central Excise

Entitlement for refund claim - Rule 5 of Cenvat Credit Rules - Unutilized accumulated credit as on the date of their opting for the benefit of an exemption Notification No. 30/2004-CE dated 01/4/2006 which prohibited the availment of Cenvat credit - Held that - There is no provision either in the Cenvat Credit Rules or under the Central Excise Act allowing cash refund of such accumulated credit. Such cash refunds of the credit, which is meant for only further utilization in discharge of the duty of excise on the final product, would enrich the Assessee unjustifiably. The Tribunal being a creature of the Act, has to act within the framework of the Act and cannot go beyond that. In the absence of any provision specifically permitting the refund of such credit, in cash, the same cannot be allowed on the basis of equity, justice and good conscious. In the absence of any such rule or provision of law, which learned Advocate has also been unable to show us, we find no justifiable reasons to grant the refund of the said credit. - Decided against the appellant

Summary

Issues:
1. Entitlement to refund of unutilized accumulated credit under an exemption notification.
2. Interpretation of Rule 5 of Cenvat Credit Rules for refund claims.
3. Applicability of legal provisions for cash refund of accumulated credit.
4. Precedent set by the Hon'ble Karnataka High Court and Tribunal's Larger Bench decision.
5. Judicial discipline and adherence to statutory provisions in deciding refund claims.

Analysis:
1. The case revolved around the appellant's claim for a refund of unutilized accumulated credit upon opting for an exemption notification that prohibited the availment of Cenvat credit. The appellant's reliance on Rule 5 of the Cenvat Credit Rules for the refund claim was deemed inappropriate as the rule primarily applies to export scenarios. The Tribunal emphasized that the absence of specific provisions permitting cash refunds of accumulated credit precludes such refunds, as they would unjustly enrich the assessee.

2. The appellant's argument, citing the Hon'ble Karnataka High Court decision allowing refunds in certain circumstances, was countered by the Tribunal's Larger Bench decision favoring revenue. The Tribunal highlighted the need to follow judicial discipline and statutory provisions, emphasizing that the Tribunal cannot exceed its statutory powers or exercise writ jurisdiction. The dismissal of the appeal by the Hon'ble Supreme Court was noted, indicating no interpretation or declaration of law in favor of the assessee.

3. The Tribunal reiterated that the policy of refunding input credit is regulated by statutory provisions, and the decision of the Larger Bench, which resolved the disputed issue in favor of revenue, must be adhered to. The Tribunal emphasized that the Hon'ble High Court decision should prevail in case of disputes with the Tribunal's decision, but the Larger Bench's decision, considering the High Court's decision, should be followed due to judicial discipline and adherence to statutory provisions.

4. Ultimately, the Tribunal found no merit in the appellant's case and rejected the appeal, emphasizing the need to act within the framework of the Act and statutory provisions. The decision was dictated and pronounced in open court, concluding the legal judgment regarding the entitlement to a refund of unutilized accumulated credit under the exemption notification.