2012 (10) TMI 586 - AT - Central Excise

Refund in cash demand of duty - refund application for refunding the Cenvat credit in cash as they had surrendered registration certificate - held that - If the final products is not dutiable or if the duty incidence on final product is lower than that on the inputs, there is no provision in the scheme to give cash refund of credit accumulated. After accumulating credit if the factory is closed down the position cannot change. In the case of Gauri Plasticulture (P) Ltd. (2006 (8) TMI 225 - CESTAT, MUMBAI ) - such refund in cash is not warranted in the facts of this case - decided against the assessee.

Summary

Issues:
1. Refund of Cenvat credit in cash due to factory closure.

Analysis:
The case involved the Appellants engaged in manufacturing ACSR conductors of aluminum under Chapter 76 of the Central Excise Tariff Act, 1985. A Show Cause Notice was issued demanding Central Excise duty, which was confirmed partially. The Appellants appealed the order-in-original, which was rejected by the Commissioner (Appeals). Subsequently, the Tribunal allowed their appeal. The Appellants sought a refund of Cenvat credit in cash after surrendering their registration certificate due to factory closure. The adjudicating authority granted the cash refund, but the Commissioner (Appeals) overturned this decision based on the judgment in the case of Gauri Plasticulture Pvt. Ltd. The Appellants then appealed this decision.

The Counsel for the Appellants argued that since they could not utilize the Cenvat credit if refunded as credit in their account, it was appropriate for the adjudicating authority to grant the refund in cash. The Counsel cited various decisions to support this argument. On the other hand, the Revenue's representative contended that the Cenvat Credit Scheme did not allow for cash refunds of excise duty paid on inputs unless in the case of final products exported. The essence of the Tribunal's decision in Gauri Plasticulture case was highlighted to support this stance.

Upon considering both arguments, the Tribunal emphasized that the Cenvat Credit Scheme did not provide for cash refunds of excise duty paid on inputs used in manufacturing excisable goods. The scheme allowed for utilizing duty paid on inputs to discharge duty liability on final products. The Tribunal noted that the accumulation of credit due to factory closure did not change this provision. While acknowledging some cases where cash refunds were granted to assessees who closed down their factories, it was clarified that such refunds were typically in specific situations where the facts were not examined in detail or where the assessees were compelled to make deposits in disputed cases using Cenvat credit. The Tribunal found that in the present case, the Commissioner (Appeals) had properly analyzed the facts in line with the decision in Gauri Plasticulture case and concluded that cash refund was not warranted. Consequently, the appeal for cash refund of Cenvat credit was rejected.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the appeal for cash refund of Cenvat credit, emphasizing that the Cenvat Credit Scheme did not allow for cash refunds of excise duty paid on inputs used in manufacturing excisable goods unless in specific circumstances such as export of final products or other exceptional situations.