2016 (8) TMI 1100 - AT - Central Excise

Refund claim - acumulated Cenvat credit due to closure of factory - Rule 5 of CENVAT Credit Rules, 2004 - Held that - it is found that in the various judgements, Courts have held that accumulated credit on account of closure of factory can be claimed as refund under Rule 5. Therefore, in view of the above, refund under Rule 5 is admissible for accumulated credit on account of closure of factory. - Decided in favour of appellant with consequential relief

Summary

Issues:
Whether the appellant is eligible for a refund of accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules, 2004 after the closure of the factory.

Analysis:
The case involved M/s. Computer Graphics Ltd., engaged in the manufacture of various products, including Konica Colour Films and Graphic Art film. Due to a technological change, the appellant had to close their Athipet Factory on 31/07/2009, leading to an excess credit in their CENVAT Account amounting to ?50,45,522. The department rejected the refund claim based on the grounds that refund is only allowed for credit accumulation due to export and not for closure of the factory, citing Section 11B of the Central Excise Act, 1944.

The appellant appealed to the Commissioner (Appeals) after the rejection of their claim by the department. The Commissioner upheld the rejection, leading the appellant to file an appeal before the Tribunal. During the proceedings, the appellant was represented by an advocate, Shri Bharat Raichandani, while the Revenue was represented by Shri M. Balamurugan, A.C. (AR). The appellant presented their case with supporting case laws, and the Revenue reiterated the contents of the impugned order.

The Tribunal examined the records and submissions and noted the central issue of whether the appellants were entitled to a refund of accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules, 2004 following the closure of the factory. The Tribunal referred to various judgments, including UOI vs. Slovak India Trading Co Pvt. Ltd. and M/s. Srinivasa Hair Industries vs. CCE, Chennai, where similar claims were allowed. The Tribunal disagreed with the department's argument that refund is not admissible for closure of the unit, citing a case law that did not consider the relevant judgments. Ultimately, the Tribunal held that the refund under Rule 5 of CENVAT Credit Rules, 2004 is permissible for accumulated credit due to the closure of the factory.

Therefore, the Tribunal allowed the appeals of the Assessee, granting them consequential relief. The operative part of the order was pronounced in open court on 15.07.2016.