2025 (2) TMI 944 - AT - Central Excise

Refund of accumulated CENVAT Credit - denial of refund on the ground that Rule 5 ibid deals with the situation of grant of refund in case of non-utilization of CENVAT Credit on the inputs which were used for manufacture of the final products exported by the assessee - HELD THAT - The issue arising out of the present dispute is no more res integra in view of the order of this Bench of the Tribunal passed in the case of M/S. ATV PROJECTS INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX RAIGAD 2023 (9) TMI 802 - CESTAT MUMBAI where it was held that In the case in hand though the factory of the appellant was nonoperational for quite a long time but it had continued to file the statutory returns before the authorities and finally surrendered the registration certificate. Immediately thereafter since the accumulated cenvat balance lying in the books was claimed as refund in my considered view it cannot be said that such claim is barred by limitation of time. In other words availment of cenvat credit is an indefeasible right of an assessee and such right conferred under the statue cannot be taken away on the ground of limitation. By placing the reliance on the order passed in the case of M/s ATV Projects India Ltd. co-ordinate Bench of the Tribunal in the case of M/s Kinol Lubes Pvt. Ltd. Vs. Commissioner of Central GST Central Excise West Delhi 2024 (10) TMI 1254 - CESTAT NEW DELHI has allowed the refund benefit in respect of unutilized CENVAT Credit available in the books of account on closure of the manufacturing unit. Conclusion - The denial of the refund application based on the understanding of Rule 5 of the CENVAT Credit Rules was not justified and the appellants were entitled to the refund of the accumulated CENVAT Credit balance despite the suspension of production activities. There are no merits in the impugned order insofar as it has upheld confirmation of the adjudged demands on the appellant. Therefore the impugned order is set aside and the appeal is allowed in favour of the appellants.

Summary

The judgment by the Appellate Tribunal CESTAT Mumbai addressed the issue of denial of a refund application by the Department concerning the accumulated CENVAT Credit balance of the appellants due to the suspension of production activities. The key issues considered in the judgment were the interpretation of Rule 5 of the CENVAT Credit Rules, 2004, and the applicability of the limitation period for filing a refund application in such circumstances.The Tribunal referred to a previous case, M/s ATV Project India Ltd. Vs. Commissioner of Central Excise & Service Tax, Raigad, which established the principles regarding the CENVAT scheme and the availability of refund benefits for unutilized credits upon closure of a manufacturing unit. The Tribunal emphasized that the CENVAT scheme aims to prevent the cascading effect of duty on duty and allows manufacturers to claim credit for duties paid on inputs and services used in manufacturing final products.The Tribunal noted that the appellant had availed CENVAT credit as per statutory provisions and had maintained the credit balance in their account despite the suspension of production activities. The Tribunal highlighted that Rule 5 of the CENVAT Credit Rules does not specify a time limit for granting refunds and that the right to avail CENVAT credit is an indefeasible right of the assessee. Therefore, the Tribunal concluded that the limitation aspect should not apply to deny the refund benefit to the appellant in this case.Additionally, the Tribunal cited another case, M/s Kinol Lubes Pvt. Ltd. Vs. Commissioner of Central GST & Central Excise, which supported the allowance of refund benefits for unutilized CENVAT Credit upon the closure of a manufacturing unit. Based on these precedents and the interpretation of the CENVAT scheme, the Tribunal set aside the impugned order that confirmed the demands against the appellants and allowed the appeal in favor of the appellants.In summary, the Tribunal held that the denial of the refund application based on the understanding of Rule 5 of the CENVAT Credit Rules was not justified, and the appellants were entitled to the refund of the accumulated CENVAT Credit balance despite the suspension of production activities. The judgment reaffirmed the principles established in previous cases regarding the availability of refund benefits under the CENVAT scheme in such circumstances.