2016 (9) TMI 840 - AT - Central Excise

Period of limitation - Refund claim - claim filed after about 10 years from the relevant date - unutilized Modvat credit in Modvat account which could not be used for payment of duty as the final product has become exempted - Held that - the accumulation of credit is not due to any export of final product by the appellant. Hence, the claim made under Notification No. 85/87-CE dated 01/3/87 itself is without any legal basis. The said notification is in terms of sub-Rule (3) of Rule 57F of Central Excise Rules. Admittedly, the said notification has no application to the appellant s case. In such situation, we are not able to appreciate under which provision of law the present refund claim was preferred by the appellant. Neither the original order nor the impugned order discussed the legal provision under which the claim for the refund was made by the appellant. It is only mentioned that as the final product become exempted they were not able to use the credits lying in their book and hence the amount should be refunded in cash. In the absence of any legal provision in support of such refund claim we are not able to examine the merits of the claim. Regarding time limit, it is an admitted fact that the claim was filed after almost 10 years. No explanation has been provided by the appellant except to state that the provisions of Section 11B will not apply to the present case of refund. This position also, we are not able to appreciate in the absence of supporting legal provision. As the claim is not supported by any legal provision, even on the question of time limit also the appellant is not having any case on merit. - Decided against the appellant

Summary

Issues:
Claim for refund of unutilized Modvat credit, applicability of time limit under Section 11B of Central Excise Act, 1944, legal basis for refund claim, relevance of case laws on export of goods, closure of factory, and eligibility for refund under Rule 5 of Cenvat Credit Rule, 2002.

Analysis:

1. The appellant, engaged in manufacturing vegetable products liable to Central Excise duty, sought a refund of ?31,95,776 for unutilized Modvat credit following the exemption of excise duty on the final product. The claim was rejected by the Original Authority and upheld by the Commissioner (Appeals) as time-barred under Section 11B of the Central Excise Act, 1944, since it was filed after about 10 years from the relevant date.

2. The appellant argued that time limits should not apply for claiming refund of unutilized Cenvat credit on inputs used in goods exported under bond, citing various case laws. However, the Tribunal noted that these decisions were related to export situations, whereas the appellant's credit accumulation did not stem from exporting final products. The claim under Notification No. 85/87-CE lacked a legal basis as it did not apply to the appellant's case, and no legal provision supporting the refund claim was identified.

3. The Tribunal highlighted the absence of legal basis for the refund claim and the appellant's failure to provide a valid explanation for the delayed filing, refuting the appellant's argument that Section 11B did not apply. Reference to a High Court decision on closure of factories and a Tribunal decision on refund eligibility further clarified that unutilized credit refunds were typically allowed only for exports, not for other reasons. Consequently, the Tribunal dismissed the appeal due to the lack of legal support for the claim and the absence of merit regarding the time limit issue.

This detailed analysis of the judgment provides insights into the legal reasoning behind the dismissal of the appellant's claim for refund of unutilized Modvat credit and the application of relevant provisions and precedents in the case.