2018 (5) TMI 25 - HC - Central Excise

Refund of unutilized CENVAT credit - suspension of manufacturing operations - Whether on facts and in the circumstances of the case, the Tribunal is justified in allowing the appeal of respondent holding that the judgment of this Court in the case of Union of India vs. Slovak India Trading Co. Pvt. Ltd. 2006 (7) TMI 9 - KARNATAKA HIGH COURT , would apply to the facts and circumstances? - Held that - the Division Bench of this Court in the said case held that in view of the fact that there was no manufacture in the light of the closure of the company, Rule-5 of the Cenvat Credit Rules would not be available for the purpose of rejecting the claim for refund - the Tribunal was justified in allowing the appeal of the respondent - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to Tribunal's order by revenue.
2. Eligibility of refund claim by manufacturer of tractors.
3. Interpretation of Cenvat Credit Rules.
4. Application of previous court judgment to current case.
5. Justification of Tribunal's decision based on precedent.

Analysis:
1. The judgment involves an appeal by the revenue challenging the Tribunal's decision to set aside the orders of the Commissioner and the original adjudicating authority, allowing the appeal of the respondent, a manufacturer of tractors, for a refund claim. The Tribunal relied on a previous judgment involving a similar case to support its decision.

2. The respondent, a manufacturer, had availed cenvat credit balance but could not utilize it due to suspending manufacturing operations. The respondent sought a refund, which was initially rejected by the adjudicating authority and the Commissioner. The Tribunal, however, held in favor of the respondent, allowing the refund claim.

3. The Division Bench of the Court interpreted the Cenvat Credit Rules, stating that in cases where there was no manufacturing activity due to company closure, Rule-5 of the Cenvat Credit Rules would not be applicable to reject a refund claim. This interpretation was upheld, and the Tribunal's decision was justified based on this interpretation.

4. The Tribunal justified its decision by applying the precedent set by a previous judgment involving the same issue. The Court referred to the judgment in the case of M/s. Slovak India Trading Co. Pvt. Ltd., vs. CCE, Bangalore, and upheld the Tribunal's decision based on the interpretation of the Cenvat Credit Rules in that case.

5. The Court answered the substantial question of law in favor of the respondent and against the revenue, supporting the Tribunal's decision to allow the appeal of the respondent. The Court concluded that the Tribunal's decision was justified in following the precedent set by the previous judgment, disposing of the appeal accordingly.