2024 (3) TMI 5 - AT - Central Excise

Entitlement to interest on account of delay in sanctioning the eligible refund in cash - Refund of unutilized cenvat credit claimed by the Appellant on export under LUT/ Bond - accumulation of credit on account of exports - amalgamation and merger of company - Cenvat credit utilized by the appellant during the quarter April, 2011 to June, 2011 was higher than the cenvat credit availed by it during the said quarter - possibility of adjusting the accumulated credit if the appellant had exported the goods on payment of duty - HELD THAT - Though the appellant has filed the refund claim under Rule 5 for accumulated cenvat credit against export of goods but subsequently they have utilized the credit, hence, now they are not claiming the refund, however, they are claiming the interest for the period from the date of filing of application till the date of utilization of cenvat credit for which the refund claim was lodged - to decide the claim of interest first the eligibility of refund has to be decided. From the records it is observed that both the lower authorities have rejected the refund claim on the ground that the appellant s refund claim is in respect of the amount of cenvat which was transferred from M/s. Hazira Pipe Mill Ltd and Hazira Plate Ltd on account of amalgamation and merger of those companies in the present appellant s company. However, from the chart presented by the appellant it prima facie shows that the credit of 205 Crores included in the credit availed shown in August, 2010 and October and November, 2010 was on account of transfer of credit due to amalgamation and merger and thereafter, it can be seen that the entire credit of 205 Crores has been utilized between December, 2010 to March-2011. This prima facie shows that the refund claim for the period April 2011 to June, 2011 appears to be the amount out of the fresh credit availed after the utilization of transferred credit. However, the details given in the chart along with documents were not verified by both the lower authorities which is necessary to come to the conclusion that whether the refund amount is related to the transferred credit or from the credit in respect of input and input service used in the manufacture of export goods. As regard the claim of interest firstly the same is consequential to the eligibility of refund in the facts of the present case. Secondly, the claim of interest also needs to be considered independently, therefore, the entire matter needs to be remitted back to the original adjudicating authority. Appeal is allowed by way of remand to the Adjudicating Authority.

Summary

Issues:
(i) Whether refund of unutilized cenvat credit on export under LUT/Bond accumulated due to amalgamation and merger.
(ii) Whether cenvat credit utilized by the appellant was higher than availed, affecting accumulated credit for exports.
(iii) Interpretation of Rule 5 of Cenvat Credit Rules for adjusting accumulated credit.
(iv) Entitlement to interest on delay in refund sanctioning till credit utilization.

Issue (i):
The appellant's refund claim under Rule 5 was rejected on the basis that the credit transferred from amalgamation and merger was not attributed to exported goods. The appellant argued that the transferred credit was utilized for tax discharge earlier, and the refund was for duties on inputs used in exports.

Issue (ii):
The appellant demonstrated that the total credit from amalgamation/merger was utilized by January 2011, with no carry-forward. Despite this, the Commissioner upheld the rejection without considering the opening credit balance as on 01.04.2011.

Issue (iii):
The Commissioner's interpretation of Rule 5 was challenged, asserting that the appellant could adjust accumulated credit if goods were exported on duty payment.

Issue (iv):
The appellant claimed interest due to delay in refund sanctioning until credit utilization, citing eligibility for refund despite credit usage. The Tribunal found the need to verify if the refund amount related to transferred credit or fresh credit after utilization.

The Tribunal set aside the impugned order, remanding the case to the Adjudicating Authority for further consideration, emphasizing the need for verification and independent assessment of the interest claim.