2017 (4) TMI 985 - AT - Central Excise

Refund claim - amount paid under protest - The reason for rejection of such refund in the impugned order is that the appellant would not be eligible for taking the credit on inputs; once, it has been held that the final products are not liable to payment of Excise duty - Held that - It is settled law that there is no prohibition under CEA, 1944 or the rules made there-under for cash refund of duty paid by utilization of Modvat/Cenvat credit. Section 11B of the CEA does not make any distinction between duty paid in cash and that by utilization of credit - In view of the fact that the appellant is not in a position to utilize the credit, the refund is to be paid in cash - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is entitled to a refund of the Excise duty paid by utilizing Cenvat credit for activities not amounting to manufacture.
2. Whether the refund should be allowed in cash or re-credited to the modvat account.

Analysis:
1. The appellant, a Government of Madhya Pradesh undertaking engaged in electricity production and tower erection activities, paid Excise duty under protest for activities like cutting, drilling, welding, etc., on iron and steel products. The Tribunal earlier held these activities did not amount to manufacture. The dispute arose regarding the refund of ?63,30,263 paid using Cenvat credit. The authorities rejected the refund, arguing the duty was paid when the activities were not liable to duty. The appellant contended that since the activities were not manufacturing, the duty should be refunded. The Tribunal agreed, emphasizing the duty paid under protest should be refunded, including the amount paid from the Cenvat credit.

2. The appellant argued that since they are not undertaking any dutiable activities currently, re-crediting the refund to the modvat account serves no purpose and requested a cash refund. The authorities rejected the refund, stating it was paid from the Cenvat credit. The Tribunal held that there is no legal bar on cash refund of duty paid via Modvat/Cenvat credit. Citing the Central Excise Act and precedents, the Tribunal emphasized that no distinction is made between duty paid in cash or credit. As the appellant cannot utilize the credit and no dutiable activities are being carried out, the refund was ordered to be paid in cash, setting aside the impugned order.

In conclusion, the Tribunal allowed the appeal, directing the refund of the Excise duty amount paid from Cenvat credit in cash, based on the appellant's activities not amounting to manufacture and the inability to utilize the credit.