2009 (1) TMI 224 - AT - Central Excise

Refund cash refund versus re-crediting in the cenvat credit account unit closed assessee filed an appeal to CCE (Appeals), pleading that refunding an amount of Rs. 41,709/- by crediting to Cenvat credit account is meaningless as their factory is closed and they have already surrendered the Central Excise registration vide their letter dated 17-7-04 and as such they are not in a position to utilize the Cenvat credit CCE(Appeals) allowed the refund in cash Held that There is nothing in the Section 11B of the Central Excise Act, 1944 or in the Central Excise Rules or the Cenvat Credit Rules, from which it can be inferred that if, initially some duty has been paid through Cenvat credit account and subsequently if the same becomes refundable, it is to be refunded only by re-crediting the amount in the Cenvat credit account revenue s appeal dismissed.

Summary

Issues:
1. Refund of Cenvat credit amount by re-crediting to account vs. refund in cash.
2. Adjustment of confirmed demand against refund amount.
3. Applicability of Tribunal's judgments in the case.

Analysis:
1. The appeal involved a dispute regarding the mode of refund for an amount of Rs. 41,709/- arising from an earlier order. The Respondent argued that crediting the amount to their Cenvat credit account was meaningless as their factory was closed and they had surrendered their Central Excise registration. The Commissioner (Appeal) allowed the refund in cash, which was challenged by the Revenue. The Revenue contended that since the duty was paid using Cenvat credit, the refund should be re-credited to the Cenvat account, citing absence of provisions for cash refund under Modvat/Cenvat Credit Rules except for export cases. The Tribunal held that at the time of refund, the Respondent could not utilize the Cenvat credit due to the closure of their factory and surrender of registration. The Tribunal found no legal basis to support the Revenue's argument and dismissed the appeal, upholding the cash refund decision.

2. Another issue in the appeal was the adjustment of Rs. 22,707/- against a confirmed duty demand. The Respondent had appealed against this demand, and the Commissioner (Appeal) upheld the adjustment under Section 11 of the Central Excise Act, 1944. The Tribunal did not delve into this issue as the main focus was on the mode of refund for the larger amount. The adjustment against the demand was not contested further in the appeal.

3. The Revenue had raised concerns about the applicability of Tribunal judgments cited by the Commissioner (Appeal) in support of allowing cash refund. The Revenue argued that the Modvat/Cenvat Credit Rules did not provide for cash refund except in specific export-related scenarios. However, the Tribunal found the circumstances of the case, where the factory was closed and registration surrendered, justified the cash refund despite the absence of explicit provisions for such cases in the rules. The Tribunal dismissed the Revenue's appeal, emphasizing the practicality and fairness of allowing cash refund in the given situation.

In conclusion, the Tribunal upheld the Commissioner (Appeal)'s decision to allow cash refund of Rs. 41,709/- to the Respondent, considering the impracticality of re-crediting the amount to the Cenvat credit account due to the closure of the factory and surrender of registration. The appeal was dismissed, emphasizing the specific circumstances of the case over strict interpretation of the rules.