2017 (5) TMI 450 - AT - Central Excise

Refund of cenvat credit in cash - respondent is not able to utilize the cenvat credit account - case of Revenue is that after March 2010 no activity was undertaken by the respondent and their factory was actually closed by them although they have not surrendered the registration certificate - Held that - During pendency of the appeal before the Commissioner (Appeals) the respondent has surrendered their registration certificate. In that circumstance the respondent was not able to utilize the Cenvat credit account for payment of duty as no duty liability was confirmed against the respondent. In that circumstance the Commissioner (Appeals) has rightly allowed the refund in cash - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the refund should be allowed in cash or through Cenvat credit account.
2. Surrendering of registration certificate by the respondent.
3. Manufacturing activity status of the respondent at the time of refund claim.

Analysis:
1. The appeal was filed by the Revenue against the order allowing refund in cash instead of through the Cenvat credit account. The Commissioner (Appeals) based the decision on the fact that the respondent was not utilizing the Cenvat credit account due to the closure of the unit and surrendering of registration. The Revenue argued that the refund should have been allowed through the Cenvat credit account as the registration certificate was not surrendered at the time of sanctioning the refund. The Tribunal found that the respondent was not engaged in manufacturing activity at the time of refund sanctioning and had surrendered the registration certificate during the appeal process. Consequently, the Commissioner (Appeals) decision to allow cash refund was upheld, dismissing the Revenue's appeal.

2. The issue of surrendering the registration certificate by the respondent was crucial in determining the mode of refund. The Revenue contended that since the registration certificate was not surrendered at the time of refund sanctioning, the refund should have been made through the Cenvat credit account. On the other hand, the respondent argued that they had ceased production, cleared existing stock, and closed the factory, even though the registration certificate was not formally surrendered. The Tribunal noted that the registration certificate was eventually surrendered during the appeal proceedings, indicating the respondent's inability to utilize the Cenvat credit account, thus justifying the cash refund.

3. The manufacturing activity status of the respondent at the time of the refund claim played a significant role in the decision-making process. The Revenue emphasized that the respondent was registered with the central excise department at the time of the refund order and was not considered non-existent. However, the Tribunal observed that the respondent had ceased manufacturing activities and was not utilizing the Cenvat credit account, leading to the appeal for cash refund. The surrendering of the registration certificate further supported the respondent's claim for cash refund, as no duty liability was confirmed against them due to the lack of manufacturing activity. Consequently, the Tribunal upheld the Commissioner (Appeals) decision to grant the refund in cash, dismissing the Revenue's appeal.