2018 (4) TMI 1455 - AT - Central Excise

Cash refund of un-utilised credit balance - closure of factory - Held that - Since, the appellant had lawfully earned the Cenvat credit and due to closure of the factory, is not in a position to utilise the same now, such pre-deposited amount, should be refunded to it in cash - the decision in the case of M/s. Shalu Synthetics Private Limited Versus CCE. & ST. Vapi 2014 (6) TMI 343 - CESTAT AHMEDABAD squarely applies to the case, where it was held that in case of closure of factory, the assessee should be allowed for cash refund of the un-utilised credit balance available in the books of account. Appellant is entitled for refund in cash - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Refund of Central Excise Duty amount
- Restoration of refund amount to Cenvat Account
- Appeal for cash refund instead of Cenvat Account restoration

Analysis:
1. The appellant was engaged in manufacturing copper ingots and rods, facing duty demand due to alleged clandestine removal of goods. After a series of legal proceedings, the Tribunal's final order favored the appellant, leading to a refund application for the duty amount. The refund claim was sanctioned, but the appellant's appeal against the restoration of a portion of the refunded amount to the Cenvat Account was rejected by the Commissioner (Appeals).

2. The appellant appealed against the order, arguing that since their factory was closed, restoring the refund to the Cenvat Account would serve no purpose as they couldn't utilize the credit for Central Excise duty payment. The appellant sought a cash refund, citing various precedents supporting their claim for cash refund in similar situations of factory closure.

3. The Revenue, represented by the ld. D.R., supported the findings of the impugned order, maintaining that the refunded amount should be restored to the Cenvat Account.

4. Upon hearing both sides and examining the case records, it was established that the appellant was entitled to Cenvat credit for duty paid on inputs/capital goods. The Tribunal noted that the appellant's factory was operational when the pre-deposit was made as per the court's direction. However, due to the factory closure, the appellant could not utilize the Cenvat credit, justifying the cash refund request.

5. The Tribunal found merit in the appellant's argument, emphasizing that since the appellant lawfully earned the Cenvat credit but couldn't utilize it due to factory closure, the pre-deposited amount should be refunded in cash. Citing relevant precedents, the Tribunal concluded that in cases of factory closure, cash refund of unutilized credit balance should be allowed.

6. Consequently, the impugned order was set aside, and the appeal was allowed, determining that the appellant was eligible for a cash refund of the pre-deposited amount.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the Tribunal's decision in favor of the appellant's appeal for a cash refund instead of restoration to the Cenvat Account.