2005 (6) TMI 155 - AT - Central Excise

Summary

Issues:
1. Correctness of allowing refund in cash to the respondents.
2. Applicability of Cenvat rules and exemption notification on refund claim.

Analysis:
Issue 1: The appeal concerns the correctness of allowing the refund in cash to the respondents, contested by the revenue. The respondents had cleared packing material without duty payment, later depositing the duty amount under protest based on circulars issued by the Board. The respondents filed a refund claim after a subsequent circular clarified no duty was payable on the material. The adjudicating authority partly allowed the claim in cash and through Cenvat. The Commissioner (Appeals) upheld the refund in cash, citing exemption under Notification No. 50/2003 and Board circulars. The Member (J) found no illegality in the Commissioner's decision, as the Cenvat Credit Rules had become inoperative to the case, justifying the refund in cash. The judgment distinguished the case of Purvi Fabrics & Texturise (P) Ltd. v. CCE, Jaipur-II as not applicable to the current scenario.

Issue 2: The second issue revolves around the applicability of Cenvat rules and exemption notification on the refund claim. The respondents argued that due to availing exemption under Notification No. 50/2003, they could not utilize the credit in the Cenvat account. Relying on Board circulars and the exemption notification, the Commissioner (Appeals) concluded that Cenvat Credit Rules and Rule 9 regarding unit registration were inapplicable to the respondent's unit from a certain date. Consequently, the refund in cash was deemed appropriate as allowing it through Cenvat would be futile. The Member (J) upheld the Commissioner's decision, dismissing the revenue's appeal and confirming the refund in cash to the respondents.

In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi upheld the decision to allow the refund in cash to the respondents based on the specific circumstances and legal provisions applicable to the case, emphasizing the inapplicability of Cenvat rules and the exemption notification to the refund claim.