2017 (5) TMI 1189 - AT - Central Excise

Refund claim - refund of CENVAT Credit lying unutilized in their Cenvat Credit account - Held that - it is clear that Rule 5 of CCR, 2004 does not authorize granting refund of CENVAT Credit in all the cases; it authorizes grant of refund only in case where final products have been exported. Thus, there is no provision in law of Central Excise for grant of refund of such accumulated credit to the appellant - As the policy of the Government is that tax on exported goods is zero rated and the export goods should not suffer any taxes. Therefore, a provision such as Rule 5 allows the refund of duty in respect of CENVAT credit on inputs which have suffered Central Excise duty but the finished goods are exported - appeal dismissed - decided against appellant.

Summary

Issues Involved:
Appeal against rejection of refund claim for unutilized Cenvat Credit.

Analysis:
The appellant, engaged in manufacturing, faced accumulation of Cenvat Credit due to inverted duty structure. After opting for an exemption notification and not paying duty on final goods, they filed a refund claim for the accumulated credit. The claim was rejected by lower authorities, leading to the current appeal before the Tribunal.

The Tribunal reviewed the submissions and cited the Larger Bench decision in M/s Steel Strips and another decision in M/s Phoenix Industries Pvt Ltd. It emphasized that Rule 5 of Cenvat Credit Rules, 2004 only authorizes refund of credit in cases where final products are exported. The Tribunal highlighted that no person has a vested right in refund unless vested by law, and that the purpose of the law and eligibility are crucial in determining refund claims.

Further, the Tribunal explained that Rule 5 allows refund of unutilized credit subject to conditions specified by the Central Government. Refund is permitted when adjustment of credit is not possible for clearing goods for home consumption or export on payment of duty. The Tribunal clarified that the refund is permissible only in cases of export of goods and not for any other reason. The Central Government's Notification 5/2006 provides conditions for availing the refund, based on export clearances of final products.

Based on the above analysis, the Tribunal upheld the impugned order rejecting the refund claim, as it was found to lack merits. The appeal was dismissed, citing the Tribunal's previous decisions and the statutory provisions governing refund of Cenvat Credit.

In conclusion, the Tribunal's decision was based on the specific provisions of Rule 5 of the Cenvat Credit Rules, 2004, and the conditions set forth by the Central Government for refund claims. The appellant's failure to fulfill the conditions for refund, as specified in the law, led to the dismissal of the appeal.