2019 (4) TMI 436 - AT - Central Excise

Refund of unutilized CENVAT Credit - closure of unit - refund rejected on the ground that the claimant failed to demonstrate that unutilised cenvat credit was in respect of inputs or input services used for manufacture of final products exported by them or intermediate products used for exports - Rule 5 of CCR, 2004 - Held that - Once the factory was closed there was no scope of utilising the credit so accumulated. The respondent has cited plethora of judgments of Hon ble High Courts and Apex Court in addition to the various Tribunal s Order wherein the refund of accumulated cenvat stands allowed. Also in the present case, one of the reason for accumulation of credit was due to payment of duty in cash and imposition of additional SAD of 4% - appeal dismissed - decided against Revenue.

Summary

Issues:
Refund of unutilized cenvat credit under Rule 5 of CCR, 2004 for a unit's closure.

Analysis:
The Commissioner filed an appeal against the rejection of a refund application for unutilized cenvat credit due to a unit's closure. The adjudicating authority held that the claimant failed to prove the credit was for inputs used in exported final products. The Appellate Commissioner allowed the appeal based on precedents like Slovak India Trading Co. The revenue argued that cenvat refund is only for duty-free exports, not closure situations. They cited Steel Strip and other cases to support their position.

The Respondent explained that credit accumulated due to paying duty from PLA and lower margins. They relied on various judgments, including Slovak India Trading Co. and Jain Vanguard Polybutylene, to justify the refund. They argued that duty paid on inputs is not included in the cost of production, preventing unjust enrichment. They cited Dai ichi Karkarai Ltd. and other cases to support their stance on cost calculation and consistency of judgments.

The Tribunal found that the credit accumulation was due to duty payment from PLA and SAD imposition. They noted the Gujarat High Court's decision in Ishaan Copper Pvt. Ltd. and the upheld Tribunal order in Slovak trading Co. The Tribunal upheld the refund based on precedents and the Supreme Court's decision in Kamlakshi Finance Corporation Ltd., concluding that the revenue's appeal lacked merit.

In conclusion, the Tribunal upheld the Appellate Commissioner's decision to allow the refund of unutilized cenvat credit due to the unit's closure, citing relevant judgments and legal principles.