2018 (12) TMI 1176 - AT - Central Excise

Refund of unutilized CENVAT Credit - inputs/capital goods - manufacture of Rectified Spirit/Denatured Spirit and Fusel Oil - rule 5 of CCR - Held that - Identical issue came up before Hon ble High Court of Rajasthan in the case of Welcure Drugs & Pharmaceuticals Limited 2018 (8) TMI 1169 - RAJASTHAN HIGH COURT wherein their Lordships after analysing all the decisions on the issue and considering the provisions of Rule 5 of CENVAT credit Rules 2004 has held that Tribunal is fully justified in ordering refund particularly in the light of the closure of the factory and in the light or the assessee coming out of the Modvat Scheme. Refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal filed by Revenue against rejection of refund claim for unutilized CENVAT credit.
2. Interpretation of Rule 5 of CENVAT Credit Rules, 2004 regarding refund of unutilized credit.
3. Comparison of decisions by different High Courts on the issue.
4. Application of judicial discipline in following High Court judgments.

Analysis:
1. The appeal was filed by Revenue against the rejection of a refund claim for unutilized CENVAT credit by the respondent, who had surrendered registration and sought a refund of the credit amount. The first appellate authority set aside the rejection, citing a judgment by the Hon'ble High Court of Karnataka, which was upheld by the Hon'ble Apex Court, establishing the right to claim such a refund.

2. The Revenue argued that Rule 5 of the CENVAT Credit Rules, 2004 only permits a refund of unutilized credit in case of exported goods. They relied on decisions like Steel Strips vs. CCE, Ludhiana and Om Enterprises vs. CCE, Pune-II. However, the respondent cited judgments from the Hon'ble High Court of Karnataka and Hon'ble High Court of Rajasthan, emphasizing the right to claim a refund of unutilized credit even without exporting goods.

3. The Tribunal examined the issue in light of the judgments from different High Courts, particularly focusing on the decision by the Hon'ble High Court of Rajasthan in the case of Welcure Drugs & Pharmaceuticals Limited. The Tribunal highlighted the principle of estoppel and judicial discipline in following established High Court judgments, emphasizing the binding nature of such decisions on the Tribunal.

4. Ultimately, the Tribunal upheld the Order-in-Appeal in favor of the respondent, citing the judgment by the Hon'ble High Court of Rajasthan as a precedent. The Tribunal rejected the Revenue's argument based on the Larger Bench decision, emphasizing the need to maintain judicial discipline and follow established High Court judgments. The appeal was dismissed, affirming the right of the respondent to claim a refund of unutilized CENVAT credit as per the relevant legal provisions and judicial precedents.

This detailed analysis of the judgment showcases the legal interpretation, application of precedents, and the importance of following established judicial decisions in resolving disputes related to CENVAT credit refunds.