2020 (8) TMI 785 - AT - Central Excise

Cash Refund of unutilized CENVAT Credit - closure of factory - refund claim application was filed on 31.10.2017 more than one year after the date of surrender of the central excise registration - time limitation - applicability of Rule 10 of the Cenvat Credit Rules 2004. HELD THAT - A plain reading of Section 11B shows that it provides for refund of excise duty paid. It does not provide for the refund of unutilized Cenvat Credit. The entire Cenvat credit is governed by the Cenvat Credit Rules 2004 which provide for availment/utilization of the Cenvat credit. In some specific cases refund of unutilized Cenvat credit in cash has also been provided under Rule 5 of the Cenvat Credit Rules 2004. The appellant s case is not under this rule. The appellant has applied for refund under Section 11B of the Central Excise Act 1944 read with Rule 10 of the Cenvat Credit Rules 2004. This rule only provides for transfer of unutilized Cenvat credit but not encashment. The fact that they have subsequently come under GST regime makes no difference and the appellant cannot claim the refund under a legal provision which does not exist. Hon ble High Court of Karnataka in the case of UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. 2006 (7) TMI 9 - KARNATAKA HIGH COURT has held that refund of the Cenvat credit is admissible under Rule 5 of the Cenvat Credit Rules 2004 if the factory is closed. Subsequently this rule has been amended and right now there is no scope of refund of the Cenvat credit which has not been utilized at the time of closer of the factory. At any rate the appellant s application was not under Rule 5 of the Cenvat Credit Rules 2004. The appellant s request for cash refund of unutilized Cenvat credit cannot be admitted under any legal provision - Appeal dismissed.

Summary

Issues:
1. Refund claim of unutilized Cenvat credit filed after factory closure.
2. Rejection of refund claim based on Rule 10 of the Cenvat Credit Rules, 2004 and time limit.
3. Applicability of Section 11B of the Central Excise Act, 1944 to the refund claim.
4. Interpretation of legal provisions for refund of unutilized Cenvat credit.

Analysis:
1. The appellant filed a refund claim for unutilized Cenvat credit after surrendering their central excise registration. The claim was rejected based on the late filing and Rule 10 of the Cenvat Credit Rules, 2004.

2. The rejection was upheld by the first appellate authority, citing Rule 10 which allows transfer but not cash refund of unutilized Cenvat credit. The appellant argued for a refund based on precedents like Navdeep Packaging Industries and Shree Krishna Paper Mills cases.

3. The Departmental Representative contended that Section 11B of the Central Excise Act, 1944 only allows refund of excise duty paid, not unutilized Cenvat credit. The legal provisions do not provide for refund of Cenvat credit if the factory is closed.

4. The Tribunal analyzed Section 11B and Rule 10, emphasizing that Section 11B pertains to refund of excise duty, while Rule 10 governs the transfer of Cenvat credit, not cash refund. Pre-GST, Rule 5 allowed refund for unutilized credit, but the current rules do not permit such refunds post-factory closure.

5. Ultimately, the Tribunal upheld the rejection of the refund claim, stating that the appellant's request for cash refund of unutilized Cenvat credit does not align with any existing legal provision. The appeal was dismissed based on the lack of a legal basis for the refund claim.

This detailed analysis of the legal judgment highlights the key issues, arguments presented, legal provisions, and the Tribunal's decision regarding the refund claim of unutilized Cenvat credit filed after the factory closure.