2016 (8) TMI 700 - HC - Central Excise

Refund of rebate - in the form of cash rather than reversal of Cenvat credit - Petitioner unit has discontinued its manufacturing activity and that therefore, the Cenvat credit is of no further use - Held that - the petitioner had not made any detailed submissions bringing it to the notice of the authorities special grounds why as an exception to the normal rule of refund of rebate in form of reversal of Cenvat credit, the same should be paid in cash. Had the petitioner built case of delay on part of the Department in deciding the rebate application, due to which in the meantime, the petitioner unit having closed down, the cash refund was justified, we would have examined the case further on light of the submissions of the Counsel for the petitioner that Rule 5B of the Cenvat Credit Rules, 2004, though does not specifically provide for it, also does not prohibit it. Decided against the petitioner

Summary

Issues:
Petitioner's request for cash rebate of excise duty on exports, refusal of cash rebate by revisional authority, discontinuation of manufacturing activity by petitioner unit affecting Cenvat credit, lack of detailed submissions by petitioner justifying cash refund, interpretation of Rule 5B of Cenvat Credit Rules, 2004.

Analysis:
The High Court addressed the grievance of the petitioner regarding the order of the revisional authority dated 03.07.2012, which accepted the petitioner's request for rebate of excise duty on exports but refused to provide the rebate in cash. Instead, the revisional authority directed the reversal of the Cenvat credit, citing that the refund would be made in the same manner as it was paid. The petitioner contended that their manufacturing activity had ceased due to the passage of time, rendering the Cenvat credit useless, and thus, they sought the rebate in cash. However, the Court noted that the petitioner did not present detailed submissions highlighting exceptional grounds warranting a departure from the standard practice of refunding rebates through Cenvat credit reversal.

The Court emphasized that the amount in question was not substantial and underscored the petitioner's failure to adequately demonstrate reasons justifying a cash refund over Cenvat credit reversal. The judgment highlighted that if the petitioner had established a case of delay on the part of the Department in processing the rebate application, leading to the closure of the petitioner unit, the Court would have considered the matter further. The Court also deliberated on the interpretation of Rule 5B of the Cenvat Credit Rules, 2004, noting that while the rule did not explicitly allow for cash refunds, it also did not expressly prohibit them.

Ultimately, the Court dismissed the petition, reasoning that in the absence of compelling justifications and detailed arguments from the petitioner, the request for a cash rebate could not be granted. The Court concluded by discharging the notice, thereby upholding the decision of the revisional authority to refuse the cash rebate and order the reversal of Cenvat credit as per the standard procedure.