2019 (5) TMI 1404 - AT - Central Excise

Refund of unutilized CENVAT Credit - closure of factory - rejection on the ground that the claim is not admissible on merits in terms of Section 11-B of Central Excise Act 1944 read with rule-5 of Cenvat Credit Rules 2004 as the refund is available only in case of export of final products or intermediates without payment of duty under bond or letter of undertaking - HELD THAT - The appellant factory was closed down its production activity since October 2015 and they were filing NIL return. The jurisdictional Superintendent has also certified that since October 2015 there is no production and the appellants are filing NIL return - The Appellate Commissioner should have considered the above facts and should have applied the reasoning that when there is no production and the Appellants have sold/ cleared the machinery and capital goods itself that means that they have closed down their production and the factory is lying closed. The appellant s are eligible for refund of accumulated amount of modvat / cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund of accumulated cenvat credit due to closure of factory.

Analysis:
The appeal was filed against the Order-in-Appeal rejecting the refund claim of accumulated cenvat credit by M/s Century Copper Rod Pvt. Ltd. The appellant's factory had ceased manufacturing activities and applied for a refund of unused cenvat credit. The dispute arose when the claim was rejected on the basis that the factory was not considered closed as capital goods were sold on payment of duty using cenvat credit. The Commissioner (Appeals) upheld the rejection, leading to the appeal before the Appellate Tribunal.

The appellant argued that the closure of the factory was evident from the lack of production and clearance of finished goods since 2015. They provided evidence, including monthly returns and a certificate from the Superintendent certifying nil production. The appellant contended that the sale of machinery and capital goods indicated the closure of the factory, making them eligible for the refund. The appellant cited various judgments where similar refund claims were allowed by Tribunals and High Courts.

On the other hand, the Revenue argued that since the appellant had cleared capital goods by paying duty through cenvat credit, they had not exited the cenvat scheme, thus disqualifying them from a refund. The Revenue supported the findings of the appellate authority.

After considering the submissions and evidence, the Appellate Tribunal observed that the factory had indeed ceased production activities since October 2015, as evidenced by nil returns and certification from the Superintendent. The Tribunal concluded that the sale of machinery and capital goods indicated the closure of the factory, making the appellant eligible for the refund of accumulated cenvat credit. Citing precedents and judgments, the Tribunal set aside the impugned order and allowed the appeal, granting the refund to the appellant.

In conclusion, the Appellate Tribunal ruled in favor of the appellant, emphasizing that the closure of the factory was established by the lack of production, sale of machinery, and certification of nil production. The Tribunal's decision was based on the principle that once a factory is closed, there is no opportunity to utilize accumulated cenvat credit, entitling the appellant to the refund. The judgment highlighted the importance of factual evidence and legal precedents in determining the eligibility for refund claims in such cases.