2017 (10) TMI 130 - AT - Central Excise

Refund in cash - N/N. 39/2001-CE dated 31/07/2011 - Held that - the law clearly lays down the person availing benefit of N/N. 39/2001-CE will utilize the Cenvat Credit only for domestic clearances and if after utilizing the entire credit for such domestic clearances if any duty is paid in cash, the same will be refunded to the manufacturer - In the instant case, the appellants have exhausted their Cenvat Credit on export under rebate in violation of N/N. 19/2004-CE (NT) as amended by N/N.37/2007. Consequently, since the appellants utilized most of their credit available in rebate, they ended up paying part of the duty in cash, for which they have filed the refund claim - no refund in cash allowed - appeal dismissed - decided against appellant.

Issues:
Refund claim rejection under Notification No.39/2001-CE for duty paid in cash after utilizing Cenvat Credit for export under rebate.

Analysis:
The appellant filed a refund claim for duty paid in cash under Notification No.39/2001-CE after exhausting Cenvat Credit for exporting goods under rebate. The appellant argued that they did not claim rebate on exported goods' value and thus should be granted the refund. The total excise duty liability for the month was &8377; 94,95,486, out of which &8377; 18,07,436 was paid in cash from PLA, and the rest from the Cenvat account. The appellant contended that the revenue's rejection was incorrect as they did not claim rebate on the exported goods' value. However, the law specifies that manufacturers availing Notification No.39/2001-CE must utilize Cenvat Credit only for domestic clearances and not for exports under rebate. The Tribunal found that the appellant had used most of their credit for rebate, leading to paying part of the duty in cash, which was in violation of the notification. The Tribunal noted that even if the appellant did not use the Cenvat Credit for rebate, they would not have paid duty in cash as they had sufficient credit to cover the duty liability for domestic clearances. Therefore, the appeal was dismissed as the appellant's actions were in violation of the notification's specific provisions.

This judgment clarifies that under Notification No.39/2001-CE, duty paid in cash after exhausting Cenvat Credit for exporting goods under rebate is eligible for a refund. However, the law prohibits using Cenvat Credit for exports under rebate for manufacturers availing this notification. The Tribunal emphasized that adherence to notification conditions is crucial, and any violation, even if unintentional, would disqualify the appellant from claiming a refund. The Tribunal highlighted that the appellant's argument about paying duty in cash even without using Cenvat Credit for rebate was unfounded, as they had sufficient credit to cover the duty liability for domestic clearances. This case underscores the importance of strict compliance with notification provisions to avoid disqualification from refund claims.

The Tribunal's decision reaffirms the principle that manufacturers availing specific notifications must strictly adhere to the prescribed conditions. In this case, the appellant's use of Cenvat Credit for exporting goods under rebate, contrary to the notification's terms, led to the rejection of their refund claim. The Tribunal emphasized that the appellant's actions, even if resulting in paying duty in cash, were not justifiable as they had enough credit to cover the duty liability for domestic clearances. This ruling serves as a reminder for manufacturers to carefully follow notification requirements to avoid adverse consequences such as refund claim rejections.

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