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2019 (7) TMI 564 - AT - Central ExciseRefund of unutilized credit - time limitation - refund rejected for having been filed beyond the period of limitation of one year prescribed in section 11B of Central Excise Act, 1944 - N/N. 30/2004-CE dated 9th July, 2004 - HELD THAT - The original authority has exercised power of dismissal of the application at the threshold by taking recourse to the bar of limitation of time. The claim has been preferred under rule 5 of CENVAT Credit Rules, 2004. The said Rules govern disposition of credit equivalent to duty discharged on raw material, consumables, capital goods and input services procured for, and attributable to, goods that have been exported. That may, or may not, apply to the present dispute. The adjurement of the Hon ble High Court of Karnataka, in UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. 2006 (7) TMI 9 - KARNATAKA HIGH COURT , requiring ascertainment of any other provision under which entitlement to refund may be allowed should also be coupled with it. It would, therefore, be appropriate for us to set aside the impugned order for having to failed to comply with the principles of natural justice and remand the application for refund back to the original authority for necessary action thereon in accordance with the decisions cited. Appeal allowed by way of remand.
Issues:
Claim for refund of accumulated CENVAT credit rejected based on limitation period and reliance on precedent. Deferred by Tribunal pending High Court decision. Dismissal of appeal due to Government threshold. Applicability of precedent judgments. Denial of claim without prior notice and compliance with principles of natural justice. Analysis: 1. The appellant, a manufacturer of polyester and polyester viscose yarn, sought a refund of accumulated CENVAT credit under rule 5 of CENVAT Credit Rules, 2004. The dispute arose from the exercise of an option under notification no. 30/2004-CE dated 9th July 2004, which subjected the manufactured product to a specified rate for availing CENVAT credit. The claim was rejected for being filed beyond the limitation period of one year as per section 11B of the Central Excise Act, 1944, with the relevant date determined as the opting for the exemption scheme in 2004. The rejection was based on the decision of the Larger Bench of the Tribunal in Steel Strips v. Commissioner of Central Excise, Ludhiana. 2. The Tribunal deferred the matter awaiting a decision from the High Court of Bombay in a related appeal. The appellant informed that the appeal had been dismissed due to a Government threshold for continuing litigation. Reference was made to the decision in Jain Vanguard Polybutylene Ltd case, which was affirmed by the High Court of Bombay and the Supreme Court. The High Court emphasized judicial discipline in maintaining consistent stands on identical questions. 3. The Authorized Representative relied on a Tribunal decision where accumulated CENVAT credit was deemed ineligible for refund due to non-compliance with prescribed procedures. The Tribunal in another case highlighted the importance of scrutinizing each claim for refund eligibility instead of a peremptory dismissal based solely on rule 5 of CENVAT Credit Rules, 2004. It was clarified that closure of operations eliminates the duty liability and the obligation to allow adjustments, making accumulated CENVAT credit redundant. 4. The denial of the claim without prior notice and the failure to comply with principles of natural justice were noted. The original authority dismissed the application based on the limitation period, without considering other provisions under which refund entitlement could be allowed. The Tribunal set aside the impugned order and remanded the application for refund back to the original authority for necessary action in accordance with the cited decisions and findings. 5. The appeal was disposed of accordingly, emphasizing the need for a thorough examination of refund claims and compliance with legal principles in such matters. (Order pronounced in the open court on 11/07/2019)
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