2022 (12) TMI 904 - AT - Central Excise

Refund of duties discharged during investigation into undervaluation of physician samples - goods cleared by them between 8th January 2005 and 6th November 2006 - It is common ground that the credit restored in the account of the two units was the reversal of earlier debit for discharge of duty liability under protest during the investigations - HELD THAT - Impossibility of utilisation of such credit upon restoration is not valid ground for monetisation as an alternative. The restoration of credit has placed the appellant no differently from that of having carried forward the credit till closure of the units without having undertaken discharge of duty liability. Furthermore, duty liability had been discharged at the option of the appellant; in the revised appellate scheme, prescribed pre-deposit pending disposal was the sole mandate of law. The submission of the Learned Counsel for appellant is thus devoid of logic or merit. There are no reason to interfere with the rejection of plea for monetisation of the impugned amount. Appeal is dismissed.

Issues:
Refund of duties discharged during investigation into undervaluation of 'physician samples'; Restoration of credit in CENVAT credit account of closed units; Applicability of precedent judgments on refund claims; Monetization of accumulated CENVAT credit upon closure of unit.

Refund of Duties Discharged During Investigation:
The appeal by M/s Emcure Pharmaceuticals Ltd, a manufacturer of pharmaceutical products, stemmed from an order for refund of duties paid during an investigation into undervaluation of physician samples cleared between January 2005 and November 2006. The demand for central excise duties amounting to Rs. 1,51,38,431 was substantially set aside in appeal, leading to a refund claim of Rs. 1,27,60,345. The appellant sought refund through various modes, including CENVAT credit accounts and personal ledger accounts. The dispute arose from the manner in which the refund was processed, particularly the restoration of credit in closed unit accounts.

Restoration of Credit in CENVAT Credit Account of Closed Units:
The appellant argued that the restoration of credit in the accounts of closed units was not a valid mode of providing consequential relief as directed by the Tribunal. The appellant contended that the inability to utilize the restored credit, especially in a 100% export-oriented unit, should not preclude the possibility of monetization. However, the tribunal found that the restoration of credit did not entitle the appellant to monetization, as the legislative intent behind the CENVAT credit scheme was to ensure that duty or tax burden ultimately fell on the consumer.

Applicability of Precedent Judgments on Refund Claims:
The appellant cited various precedent judgments to support their claim for monetization of accumulated credit, emphasizing the peculiar circumstances in which they were deprived of credit earlier. However, the tribunal noted that the applicability of these judgments was subject to scrutiny based on the specific circumstances of each claim for refund. The tribunal highlighted the essence of the CENVAT credit scheme and the legislative intent behind it, which did not envision monetization in cases of impossibility of credit utilization.

Monetization of Accumulated CENVAT Credit Upon Closure of Unit:
The tribunal rejected the appellant's plea for monetization of the impugned amount, emphasizing that the restoration of credit did not alter the nature of the credit or entitle the appellant to cash refund. The tribunal held that the inability to utilize the restored credit upon closure of units did not provide a valid ground for monetization, as the CENVAT credit scheme aimed to ensure that duty or tax burden was borne by the ultimate purchaser in the supply chain. The tribunal dismissed the appeal, finding no merit in the appellant's arguments for monetization.

In conclusion, the tribunal upheld the rejection of the plea for monetization, emphasizing the legislative intent and purpose of the CENVAT credit scheme in ensuring the cascading effects of tax and burdening the ultimate consumer with the duty or tax liability.

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