2019 (3) TMI 759 - AT - Central Excise

Cash Refund of accumulated CENVAT Credit - closure of manufacturing activity - Held that - The issue decided in the case of STEEL STRIPS VERSUS COMMISSIONER OF CENTRAL EXCISE LUDHIANA 2011 (5) TMI 111 - CESTAT NEW DELHI where it was held that Law has only recognized the event of export of goods for refund of Modvat credit as has been rightly pleaded by revenue and present reference is neither the case of otherwise due of the refund nor the case of exported goods. Similarly absence of express grant in statute does not imply ipso facto entitlement to refund. So also absence of express grant is an implied bar for refund. When right to refund does not accrue under law claim thereof is inconceivable - refund cannot be granted - appeal dismissed - decided against appellant.

Summary

Issues:
Whether the appellant is eligible for cash refund of accumulated cenvat credit on closure of the factory.

Analysis:
The appeal was filed against the Order-in-Appeal passed by the Commissioner (Appeals) Central Excise & Customs, Aurangabad, rejecting the appellant's claim for a cash refund of accumulated cenvat credit amounting to Rs. 79,39,923. The appellant, engaged in the manufacture of Rectified Spirit, Special Denatured Spirit, and Fusel Oil, had stopped production due to the closure of manufacturing activities. The adjudicating authority rejected the refund claim, leading to the appeal. The appellant argued that since their factory was closed, they could not utilize the accumulated cenvat credit, thus seeking a cash refund. On the contrary, the Revenue's Authorized Representative contended that the issue of cash refund of accumulated cenvat credit on factory closure was settled by a Larger Bench judgment of the Tribunal in a specific case.

The key issue in the appeal was whether the appellant was entitled to a cash refund of accumulated cenvat credit upon the closure of the factory. The Tribunal referred to the Larger Bench judgment in the Steel Strips case, which emphasized the codified procedure for adjusting duty liability against the Modvat Account. The Tribunal noted that there was no express provision for refunding unadjusted amounts, except in the case of exports. It was highlighted that the absence of an express grant in the statute implied a bar on refunds. The Tribunal concluded that the right to a refund did not accrue under the law in this case, and therefore, the claim for refund was inconceivable. Citing the principles outlined in the Steel Strips case, the Tribunal upheld the impugned order, dismissing the appeal.

In conclusion, the Tribunal's decision was based on the precedent set by the Larger Bench judgment, which established that refunding unutilized credit was only permissible in the case of export of goods and not for other reasons. The appeal was dismissed, affirming the denial of the cash refund claim for accumulated cenvat credit on the closure of the factory.