2009 (5) TMI 450 - AT - Central Excise

Refund- Cenvat Credit- The Original Authority granted refund claim of Rs.2,94,000/- and Rs.13,897/- by way of re-credit in Cenvat Credit Account. The contention of the appellants is that factory has closed down in April, 2000 and therefore, they are not able to take credit in the Cenvat Account and, therefore, refund may be granted in cash. The Commissioner (Appeals) upheld the Adjudication Order. Held that- It is seen that the Registration Certificate of the appellants has not yet been surrendered. Hence, it is fit case to remand the matter to the Original Authority with direction to refund the amount in cash as and when Registration Certificate is surrendered. The impugned orders are set aside. Both the appeals are allowed by way of remand with the above directions.

Summary

Issues:
Refund claim in Cenvat Credit Account due to factory closure.

Analysis:
The appeals arose from a common Order regarding a refund claim of Rs.2,94,000/- and Rs.13,897/- by way of re-credit in Cenvat Credit Account. The appellants contended that their factory had closed down in April 2000, making them unable to take credit in the Cenvat Account and thus requested a cash refund. The Original Authority and the Commissioner (Appeals) upheld the Adjudication Order. The appellants' representative argued that they had paid the duty demanded through show cause notices from their Cenvat Account. The Tribunal had previously allowed the appeals, leading to the refund claim. The representative cited precedents, including the case of Slovak India Trading Co. Pvt. Ltd., upheld by various High Courts and the Supreme Court, supporting the eligibility of cash refund upon closure of a factory.

The Departmental Representative reiterated the findings of the Commissioner (Appeals) and argued that the Registration Certificate was not surrendered, indicating the factory was not closed down. He referred to a decision of the Hon'ble Punjab & Haryana High Court in a different case to support this argument. After considering both sides, the Member found that the unutilized balance in the appellants' PLA had prevented them from surrendering the Registration Certificate. Notably, the Tribunal had previously ruled that refund in cash is permissible when an assessee exits the Modvat Scheme or when a company closes down, citing Rule 5 of the Cenvat Credit Rules, a decision upheld by the Supreme Court. The Member also highlighted the decision of the Hon'ble Punjab & Haryana High Court in a similar case, allowing cash refund of Cenvat Credit. The Member distinguished the case cited by the Departmental Representative, noting that it involved a different scenario where the assessee paid higher duty on export products, which was not payable, and was deemed ineligible for cash refund. In the present case, the refund arose due to the closure of the factory.

Consequently, the Member determined that since the Registration Certificate had not been surrendered, the matter should be remanded to the Original Authority with directions to refund the amount in cash upon surrender of the Certificate. The impugned orders were set aside, and both appeals were allowed by way of remand with the specified directions. The Order was dictated and pronounced in open court on 19-5-2009.