2019 (12) TMI 390 - AT - Central Excise

Cash Refund of unutilized amount of CENVAT Credit - closure of manufacturing activities - Section 11B of CEA, 1944 - HELD THAT - The order of the Hon'ble Supreme Court in the case of UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. 2007 (1) TMI 556 - SC ORDER cannot be read as a declaration of law since SLP was dismissed leaving the question of law open and the same has been answered by it holding that refund is not permissible under Section 11B and Section 11B(2) where CENVAT credit could not be utilised due to closer of manufacturing activities. Credit cannot be allowed - appeal dismissed - decided against appellant.

Summary

Issues:
Refund claims of the appellant rejected by Commissioner of CGST & Central Excise (Appeals) - CENVAT credit on inputs, capital goods, and input services - Appellant's lease agreement terminated - Denial of refund based on judicial precedents - Appellant's appeal for refund - Interpretation of Section 11B(2)(c) of the Central Excise Act - Larger Bench judgment on refundability of CENVAT credit for closed units/factories.

Analysis:
The appellant contested the rejection of refund claims by the Commissioner of CGST & Central Excise (Appeals) concerning CENVAT credit on inputs, capital goods, and input services. The appellant had taken over a closed unit sugar factory under a lease agreement, which was later terminated, rendering the CENVAT credits unusable. The Assistant Commissioner initially granted the refund based on a judgment of the Hon'ble Karnataka High Court, but the Commissioner (Appeals) overturned this decision citing a different case law precedent.

During the appeal, the appellant's counsel argued that the time limit specified in Section 11B(2)(c) of the Central Excise Act and the precedent cited by the Commissioner (Appeals) were not applicable to the appellant. The appellant relied on the judgment of the Hon'ble Supreme Court and a Tribunal decision to support their claim for refund. The appellant requested the order of the Commissioner (Appeals) to be set aside.

In response, the Authorised Representative for the respondent-department supported the Commissioner (Appeals)'s decision, referencing judicial decisions and a Larger Bench ruling that established the non-refundability of CENVAT credit for closed units/factories. The respondent argued against the Tribunal's interference in the Commissioner (Appeals)'s order.

The Tribunal examined the case record and the Larger Bench judgment of the Hon'ble High Court of Bombay, which addressed specific questions related to cash refund, unutilized CENVAT credit due to closure of manufacturing activities, and the applicability of a previous Supreme Court order. The Larger Bench concluded that refund was not permissible under Section 11B and Section 11B(2) for unutilized CENVAT credit due to manufacturing activity closure, leading to the dismissal of both appeals filed by the appellant.

In light of the Hon'ble High Court of Mumbai's findings on the Supreme Court's order and the Larger Bench's conclusions, the Tribunal confirmed the dismissal of both appeals and upheld the orders of the Commissioner of CGST & Central Excise (Appeals) denying the appellant's refund claims.