2017 (1) TMI 155 - AT - Central Excise

Cash refund - amount pre-deposited through cenvat account - refund sought on the ground that the respondent stopped paying the excise duty for the reason that they were availing exemption N/N. 30/2004-CE dt. 9.7.2004, therefore the respondent claimed the refund in cash. The adjudicating authority allowed the refund by way of re-credit in the cenvat account - whether the seeking of refund in cash justified? Held that - merely by debit in the cenvat account the nature of cenvat credit cannot be changed to cash at the time of sanctioning of refund. Cash refund can be given only in situation where either the assessee has paid the amount in cash or refund is against the export of goods which is not the case here - the refund in cash ordered by the Ld. Commissioner (Appeals) is absolutely without authority of law - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Refund of pre-deposited amount through cenvat account
- Cash refund vs. re-credit in cenvat account
- Applicability of judgments in similar cases

Analysis:
1. The appeal concerned a case where the appellant had pre-deposited an amount through the cenvat account as per a stay order by the Tribunal in a demand case. The Commissioner (Appeals) allowed the cash refund of a portion of this amount, which the Revenue challenged, arguing that the refund should have been in the form of re-credit in the cenvat account and not in cash.

2. The Revenue contended that the appellant had requested a refund of the pre-deposited amount, which was debited from the cenvat account. They argued that the Commissioner (Appeals) erred in allowing cash refund based on a judgment not applicable to the present case. The Revenue emphasized that the appellant was registered and maintaining the cenvat account, making re-credit the appropriate method for refund.

3. The Tribunal noted that the appellant had stopped paying excise duty and was availing an exemption, leading to the pre-deposit from the cenvat account. The Tribunal cited a previous judgment stating that unutilized cenvat credit can only be refunded if the duty was paid from PLA/cash. In this case, since the appellant did not have any cash payment liability due to the pre-deposit, cash refund was deemed unjustified.

4. The Tribunal highlighted that the judgment cited by the Commissioner (Appeals) involved a different scenario where the assessee was not maintaining a cenvat account, unlike the present case. It was emphasized that the nature of cenvat credit cannot be altered to cash merely by a debit in the cenvat account. Cash refund is permissible only when duty is paid in cash or for export of goods, neither of which applied here.

5. Consequently, the Tribunal set aside the Commissioner (Appeals)'s order, ruling that the cash refund was unauthorized by law. The appeal by the Revenue was allowed, affirming that the refund should have been in the form of re-credit in the cenvat account.