2017 (4) TMI 1163 - AT - Central Excise

Cash Refund - unutilized CENVAT credit - closure of factory - Held that - law of Central Excise which includes Central Excise Rules and CENVAT Credit Rules does not permit cash refund of CENVAT credit amount except for in case of the exports - The Tribunal in the case of Scan Synthetics Ltd Vs Commissioner of Central Excise, Jaipur-I, 2016 (6) TMI 316 - CESTAT NEW DELHI also held there is no provision in Central Excise Act or in that CENVAT credit rules to give cash refund of accumulated credit - the subject refund claim of the CENVAT amount lying in the appellant s account is not admissible - appeal dismissed - decided against assessee.

Summary

Issues:
Refund claim rejection based on CENVAT credit rules.

Analysis:
The appellant, a pharmaceutical company, appealed against the rejection of their refund claim amounting to ?1,34,45,987 under the direct price control order. The duty paid on the final product, Odoxin, was less than the input credit utilized due to varying duty rates on local and imported inputs, resulting in a significant credit balance. The appellant, upon closing their factory, sought cash refund of the unutilized CENVAT credit, which was denied by the authorities, leading to the appeal before the Tribunal.

The Tribunal deliberated on the statutory provisions governing Central Excise, including Central Excise Rules and CENVAT Credit Rules, which do not allow cash refunds of CENVAT credit except in cases of exports. Citing the Hon'ble Karnataka High Court decision in Union of India Vs Slovak India Trading Co. (P) Ltd, the appellant argued for a cash refund. However, the Tribunal referred to the larger bench decision in M/s Steel Strips Vs CCE Ludhiana, emphasizing that without a statutory mandate for refund, pleas of injustice or equity cannot influence fiscal courts. The Tribunal highlighted the importance of strict compliance with fiscal statutes and the distinction between substantive and procedural provisions.

In a subsequent case, Scan Synthetics Ltd Vs Commissioner of Central Excise, Jaipur-I, the Tribunal reiterated the lack of provisions in the Central Excise Act or CENVAT credit rules for cash refunds of accumulated credit. The Tribunal emphasized the need to adhere to the law declared by larger benches and confirmed by higher courts, maintaining judicial discipline and statutory limitations on the Tribunal's powers.

Based on the above legal principles and precedents, the Tribunal concluded that the appellant's claim for cash refund of the CENVAT credit was not admissible. The impugned order rejecting the refund claim was upheld, and the appeal was dismissed for lack of merits. The decision was pronounced in open court on 20.04.2017, emphasizing the strict adherence to statutory provisions in matters of refund claims under the CENVAT credit rules.