2017 (10) TMI 839 - HC - Central Excise

Refund of unutilized CENVAT credit - time limitation - levy of AED (T& TA) - Rule 5 of CCR, 2004 - N/N. 31/2004-CE dated 09.07.2004 - Held that - the claim has to be made before the expiry of one year from the payment of duty. But, it could be seen from the claim of refund of duty filed by the respondent, the same was made only in the year 2008 ie., the respondent assessee made the claim after a period of three years from the date of abolition of AED (T & TA), which is a clear time barred claim after the expiry of time limit for refund. Since the levy of Additional Excise Duty (T & TA) was abolished with effect from 09.07.2004, the unutilised balance credit stands lapsed and the claim of refund cannot be entertained after a period of nearly three years from the date of abolition of Additional Excise Duty (T & TA). It is clear from the records that after the abolition of Additional Excise Duty (T & TA) with effect from 09.07.2004, the unutilised balance credit lapsed, which ought to have been claimed within three years. The refund claim should have been filed within one year from the date of abolition, that too only when the respondent proves that the unutilised credit was on account of export. Hence, Rule 5 of CENVAT Credit Rules, 2004, is not applicable to the refund claim seeking refund in cash for the unutilised balance credit, that too after it was lapsed on 09.07.2004. The refund claim has to be filed within one year from the date of export as per Section 11 (B) of the Central Excise Act, 1944. Thus, it is evidently clear that the refund claim is not maintainable as time barred and hit by limitation. When the Central Excise Act, 1944 under Section 11(B), as amended, prescribes time limit for making any claim for refund of any duty of excise, the CESTAT ought to have concurred with the well considered view of the Adjudicating Authority. Moreover, CESTAT has not dealt with the aspect of limitation in the context of provisions under Section 11(B) of the Central Excise Act, 1944. Thus, the final order passed by the (CESTAT) that the unutilised credit of Additional Excise Duty is refundable merely on the basis that there is no provision in law to deny refund, deserves to be set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:

1. Time-barred refund claim under Section 11B of the Central Excise Act, 1944.
2. Applicability of Rule 5 of the CENVAT Credit Rules, 2004 for refund claims.
3. Lapsing of unutilized CENVAT credit due to the abolition of Additional Excise Duty (AED).

Issue-wise Detailed Analysis:

1. Time-barred refund claim under Section 11B of the Central Excise Act, 1944:

The appellant Department argued that the respondent's refund claim was time-barred under Section 11B of the Central Excise Act, 1944, which mandates that any refund claim must be filed within one year from the relevant date. The respondent filed the refund claim nearly three years after the abolition of AED (T & TA) on 09.07.2004, making the claim time-barred. The court emphasized that "any reason for matter of fact, the claim has to be made before the expiry of one year from the payment of duty." The respondent's delay in filing the claim rendered it inadmissible.

2. Applicability of Rule 5 of the CENVAT Credit Rules, 2004 for refund claims:

The respondent sought a refund under Rule 5 of the CENVAT Credit Rules, 2004, which allows for a refund of unutilized credit when inputs are used in the manufacture of final products cleared for export. However, the court clarified that this rule is applicable only when the unutilized credit is due to export activities. The respondent had cleared their final product for export and claimed a rebate, which was sanctioned and paid. The court noted that "the object of CENVAT Credit Claim is to avoid the cascading effect of input duty on the cost of final products," and once the duty on the final product is abolished, extending the benefit in the form of credit or cash is not permissible. Therefore, Rule 5 could not be invoked for the refund of unutilized credit in this case.

3. Lapsing of unutilized CENVAT credit due to the abolition of Additional Excise Duty (AED):

The court observed that the respondent had a balance of ?10,47,446/- in their CENVAT credit account as of 31.03.2005, which remained unutilized due to the abolition of AED (T & TA) on 09.07.2004. The court stated that "after the abolition of Additional Excise Duty (T & TA) with effect from 09.07.2004, the unutilized balance credit lapsed." The respondent's claim for a refund of this unutilized credit was not maintainable as it was filed after the credit had lapsed. The court emphasized that "the refund claim should have been filed within one year from the date of abolition," and since it was not, the claim was not valid.

Conclusion:

The court allowed the appeal filed by the Department, setting aside the CESTAT's order that had allowed the respondent's refund claim. The court confirmed the orders of the Assistant Commissioner of Central Excise and the Commissioner of Central Excise (Appeals), which had rejected the refund claim on the grounds of being time-barred and not maintainable under the applicable rules. The court reiterated that "the refund claim is not maintainable as time-barred and hit by limitation," and the CESTAT's order was set aside.