2017 (3) TMI 1151 - AT - Central Excise

Unutilized Cenvat Credit - refund in cash - denial on the ground that refund cannot be allowed in cash even in a situation where at the time of grant of refund the unit is either totally closed or it is not in a position to utilize the CENVAT credit for any reason - whether the Appellants are entitled for refund amount in cash instead of credit in their CENVAT account, as directed by the learned Commissioner (Appeals)? - Held that - the issue has been considered at length by the Larger Bench in the case of Steel Strips Versus Commissioner of Central Excise, Ludhiana 2011 (5) TMI 111 - CESTAT, NEW DELHI , where it was held that Law has only recognized the event of export of goods for refund of Modvat credit, as has been rightly pleaded by revenue and present reference is neither the case of otherwise due of the refund nor the case of exported goods. Similarly, absence of express grant in statute does not imply ipso facto entitlement to refund - From the aforesaid observation of the Larger Bench, it is very much clear that the refund cannot be allowed in cash - impugned order upheld - refund rightly rejected - appeal dismissed - decided against appellant.

Summary

Issues:
Refund claim mode - Cash or CENVAT credit account

Analysis:
The appeals were filed against the Order in-Appeal passed by the Commissioner, Customs, Central Excise & Service Tax, Vapi, regarding a refund claim of ?49,303. The Adjudicating Authority granted the refund by re-crediting the CENVAT Credit Account, which the Appellants contested. The Appellants argued that since their factory was closed and excise registration surrendered, the CENVAT credit account was not operational, and thus, the refund should be in cash. They cited precedents where refunds were allowed in cash when factories were closed. The Revenue, however, opposed this, stating that refunds in cash were not a blanket rule and cited judgments upholding the credit refund process. The Tribunal considered the conflicting views and referred to the Larger Bench decision in the Steel Strips case, which emphasized that refunds in cash, except for exports, were not permissible under the law.

The Tribunal analyzed the legal provisions and precedents, emphasizing that Modvat Credit Rules did not allow refunds in cash except for export scenarios. The Tribunal upheld the decision that refunds in cash were only granted in specific circumstances outlined in the Central Excise Act. It was noted that the Tribunal had previously ruled that cash refunds were only applicable for exported goods when the manufacturer could not utilize the credit. The Tribunal also referred to a Supreme Court decision affirming the restriction on cash refunds. The judgment concluded that the impugned order was consistent with the legal framework, and the appeals were dismissed for lacking merit.

In conclusion, the Tribunal held that the Appellants were not entitled to a cash refund and upheld the decision to re-credit the amount to the CENVAT credit account. The judgment reiterated that cash refunds were limited to specific situations like exports, as outlined in the Central Excise Act and Modvat Credit Rules. The decision was based on legal provisions, precedents, and the principle that refunds in cash were not a general entitlement under the law, except in specified circumstances.