2015 (10) TMI 694 - HC - Central Excise

Denial of refund claim - Accumulated CENVAT Credit - Held that - In view of the subsequent order dated 26-3-2008 passed by the Assistant Commissioner of Central Excise, these appeals stand dismissed as infructuous and as such, we do not propose to go into the merits of the question of law raised. It is open to the appellant to challenge the order dated 26-3-2008 passed by the Assistant Commissioner of Central Excise in the manner known to law, if so advised. - Decided against Revenue.

Summary

Issues:
1. Whether the Tribunal was correct in allowing the refund of accumulated credit of duty paid on exported fabrics under Rule 5 of the Cenvat Credit Rules, 2005, despite the fabrics not undergoing any manufacturing process?
2. Whether the Tribunal was correct in allowing the refund of accumulated credit of duty paid on exported fabrics under Rule 5 of the Cenvat Credit Rules, 2004, considering the process as "manufacture" under the erstwhile Central Excise Rules, 1944, even though it did not meet the definition of manufacture under the Central Excise Act, 1944?

Analysis:
1. The Department challenged the Final Order passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, questioning the refund of accumulated credit of duty paid on exported fabrics. The Tribunal held that the appellant was eligible for the refund of Cenvat credit claimed. However, the Assistant Commissioner of Central Excise later granted the refund, making the appeals infructuous. As a result, the High Court dismissed the appeals without delving into the merits of the legal questions raised, allowing the appellant to challenge the Assistant Commissioner's order separately if desired.

2. The primary contention revolved around the eligibility for a refund of duty paid on fabrics exported without undergoing any manufacturing process. The Tribunal's decision to allow the refund under Rule 5 of the Cenvat Credit Rules, 2005, raised the question of whether such fabrics, not subjected to any manufacturing process, should be eligible for credit. Additionally, the Tribunal's consideration of the process as "manufacture" under the erstwhile Central Excise Rules, 1944, despite not meeting the definition of manufacture under the Central Excise Act, 1944, added complexity to the issue. The conflicting interpretations of the term "manufacture" under different rules created a legal dilemma, which was not further addressed due to the subsequent refund granted by the Assistant Commissioner of Central Excise, rendering the appeals moot.