2018 (6) TMI 777 - AT - Central Excise

Refund of Cess paid - Secondary & Higher Education Cess - time limitation - Section 11B of Central Excise Act - Held that - There is no basic provision either in the Excise Act or under the Cenvat Credit Rules relating to the refund of the accumulated credit - In the absence of any such provision conferring jurisdiction on the Tribunal to deal with the refunds of accumulated unutilized credits, it is not possible to go beyond the legislation and to deal with the said issue. Cenvat Credit Rules allows the credit of the duty/tax paid on the inputs for further utilisation of the same in discharge of the dues on the final product. As such, it become clear that credit is admissible only for utilisation towards payment of duty on the final product of the asessee and such credit can never be encashed by the asessee. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Applicability of education cess and Secondary & Higher Education Cess on Cotton Yarns manufacturing.
2. Impact of exemption notifications on cess payment.
3. Refund eligibility for accumulated unutilized cess credit.
4. Interpretation of Section 11B of Central Excise Act regarding refund provisions.
5. Legal constraints on refund of accumulated credit under Cenvat Credit Rules.
6. Jurisdiction of the Tribunal in dealing with refund of unutilized credits.

Analysis:
1. The appellant was engaged in manufacturing Cotton Yarns, attracting education cess and Secondary & Higher Education Cess. They utilized the credit of cess paid on raw materials for payment on the final product, as cross payment of cess towards basic excise duty was not allowed.

2. Post 01.03.2015, yarn was exempted from cess payment via two notifications. However, the appellant, having received raw materials before this date, couldn't benefit from a subsequent notification allowing cross-utilization of cess credit for excise duty payment.

3. The appellants sought a refund of unutilized cess credit as of 01.03.2015. The revenue contended that no provision allowed such refunds, leading to a rejected refund claim and subsequent appeal.

4. The appellate authority referenced Section 11B of the Central Excise Act, highlighting its lack of provision for refunding accumulated Cenvat credit of Education Cess and SHE Cess. Refund under Rule 5 of CCR, 2004 was deemed applicable only for exports, not for accumulated credit.

5. The absence of a specific provision in the Excise Act or Cenvat Credit Rules for refunding accumulated credit was emphasized. The Tribunal couldn't exceed legislative provisions, and equity arguments for refund were dismissed.

6. The Tribunal affirmed that Cenvat Credit Rules allowed credit utilization for duty payment on the final product only. Unutilized credit could not be encashed and would lapse if not used, with no provision for refund. The lower authorities' decision was upheld, and the appeal for refund was rejected.

This comprehensive analysis of the judgment addresses all the issues involved, providing a detailed breakdown of the legal reasoning and conclusions reached by the Tribunal.