2018 (1) TMI 366 - AT - Central Excise

Refund claim - reversal of CENVAT credit under protest - Held that - As respondent had reversed the Cenvat credit under protest and the same could not utilised by them due to the reason that proceedings were going on against them and before the concluding of the proceedings, their factory was closed. In that circumstances, whatever duty has been paid by the respondent by reversal of Cenvat credit is required to be refunded to the respondent in cash as the same was not recoverable from the respondent at all - Appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against grant of refund claim to respondent
- Denial of Cenvat credit on aluminium foils used for packing bulk drugs
- Issuance and dropping of show cause notices
- Refund claim of reversed Cenvat credit
- Applicability of Notification No.24/2012-CE (NT)
- Entitlement to refund in cash
- Comparison with precedent in Steel Strips case
- Upholding of impugned order by learned Commissioner (Appeals)

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI involved the Revenue challenging the grant of a refund claim to the respondent by the learned Commissioner (Appeals). The case revolved around the denial of Cenvat credit on aluminium foils used for packing bulk drugs manufactured by the respondent. The Revenue contended that the cutting and slitting of aluminium foils did not amount to manufacture, thus disentitling the respondent from availing Cenvat credit. Show cause notices were issued to this effect, which were later dropped under Notification No.24/2012-CE (NT) dated 19/04/2012, allowing the respondent to avail Cenvat credit. Subsequently, the respondent filed a refund claim for the reversed Cenvat credit, which was initially sanctioned but later denied through a show cause notice. The learned Commissioner (Appeals) reversed this denial and allowed the refund claim in cash, leading to the Revenue's appeal.

The Revenue argued that there was no provision for granting a refund claim in cash and cited the decision of the Hon'ble Supreme Court in a specific case. They further referenced a precedent set by the Larger Bench of the Tribunal in the Steel Strips case, asserting that Cenvat credit cannot be given in cash. Despite the absence of representation from the respondent, the Tribunal proceeded with the appeal due to the narrow scope of the issue. Upon hearing the arguments and examining the records, the Tribunal found that the denial of Cenvat credit based on the cutting and slitting of aluminium foils was unjustified. The Tribunal noted that the respondent had reversed the Cenvat credit under protest, as the show cause notices issued post the enabling Notification were contrary to the law. In light of these circumstances and the specific facts of the case, the Tribunal upheld the decision of the learned Commissioner (Appeals) to allow the refund claim in cash, distinguishing it from the precedent cited by the Revenue.

Ultimately, the Tribunal dismissed the appeal filed by the Revenue, affirming the decision to grant the refund claim to the respondent in cash. The judgment emphasized the importance of adhering to legal provisions and ensuring that entitlements under relevant notifications are respected, leading to the conclusion that the respondent was rightfully entitled to the refund in this particular case.