2018 (6) TMI 631 - AT - Central Excise

Refund of unutilized CENVAT credit - time limitation - Concessional rate of duty - Hosiery garments - N/N. 29/2004-CE and N/N. 30/4004-CE dated 09.07.2004 - Held that - There is no specific enabling provision of law granting refund of such accumulated credit to an assessee when he closes his factory and is not in a position to utilize the credit. As per the provision of Cenvat Credit Rules, credit is extended to the assessee only for utilization towards payment of duty of excise on their final products. If such utilization is not possible, such accumulated credit would not result in refund of the same in cash to the assessee. Hon ble Supreme Court decision in the case of Porcelain Electrical Mfg. Co. Vs, CCF, New Delhi 1994 (11) TMI 145 - SUPREME COURT OF INDIA , held that the refund claim filed before the departmental authorities are to be governed by the time limit provided under the statute. General law of limitation is not available and the decisions where assesses have invoked extraordinary jurisdiction of High Courts and the Courts have applied the period of three years are inapplicable to the cases where the refund applications have been moved before the Revenue authorities. In as much as admittedly, the period for filing refund claims in terms of Section 11 B is only one year, the refund claim filed by the assessee after the period of three and a half years has to be held as having been filed beyond the limitation period of one year has to be rejected on the said ground - in the present case, the refund stands filed even beyond the general period of limitation of three years. Appeal dismissed - decided against appellant.

Summary

Issues:
Refund of unutilized credit balance under Notification No. 30/2004-CE - Time bar for refund claim - Applicability of Rule 5 of Cenvat Credit Rules - Judicial precedents on refund claims.

Analysis:
The appellant, engaged in manufacturing cotton knitted garments, opted for a 'nil' rate of duty under Notification No. 30/2004-CE, discontinuing availing credit despite having unutilized credit balance. The refund claim of the unutilized credit balance was denied by lower authorities on grounds of time bar, leading to the present appeal.

The appellant argued that the refund application was delayed as they anticipated possible future duty levies, intending to utilize the credit then. However, upon closing the factory and surrendering the excise license, they applied for the refund. The appellant cited decisions supporting refund entitlement upon factory closure.

The Tribunal noted the absence of a specific legal provision granting refunds for unutilized credit upon factory closure. Cenvat Credit Rules only allow credit utilization for excise duty payment on final products. The Tribunal highlighted Rule 5, permitting refunds for accumulated credit on inputs used in exported final products, subject to filing within the time limit under Section 11B of the Central Excise Act.

Despite the appellant's reliance on court decisions granting refunds beyond the limitation period, the Tribunal emphasized the statutory time limit for refund claims. Citing a Supreme Court decision, the Tribunal clarified that revenue authorities cannot exceed the statutory limitation, even if High Courts allow a general three-year limitation. The Tribunal rejected the appeal, deeming the refund claim beyond the one-year limitation under Section 11B, and even exceeding the general three-year limitation.

In conclusion, the Tribunal found no merit in the appeal, upholding the denial of the refund claim due to being time-barred under statutory provisions, emphasizing the importance of adhering to prescribed time limits for refund claims.