2021 (9) TMI 292 - AT - Central Excise

Refund of accumulated CENVAT Credit lying unutilized in their CENVAT account - closure of manufacturing operations - Section 11B of the Central Excise Act, 1944 - HELD THAT - There is no dispute that nothing has to be read into the provisions which the legislature in its wisdom has consciously drafted. No disputes also that Rule 5 of the CCR does not speak of refund in a situation where the manufacturing unit is closed down. There is also no doubt that Rule 5 does not specifically prohibit refund when a unit closes down; so, what is not there can never be read into a provision while strictly adhering to the legislative intention as to not read something into a provision. Rule 5, admittedly, does not specifically prohibit refund in a situation where a manufacturing unit closes down and the credit available could not get utilized. Hence, the legislative intention cannot be applied to the advantage of the Revenue especially when the tax suffered amount in the form of CENVAT Credit is lying with the Revenue. The Hon ble High Court of Rajasthan in the case of M/S. WELCURE DRUGS AND PHARMACEUTICALS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR 2018 (8) TMI 1169 - RAJASTHAN HIGH COURT where it was held that Tribunal is fully justified in ordering refund particularly in the light of the closure of the factory and in the light or the assessee coming out of the Modvat Scheme. The lis in the case on hand has already been settled by the Hon ble High Courts and hence, the denial of refund being incorrect, cannot be sustained - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is entitled to the refund claim made under Section 11B of the Central Excise Act, 1944.

Analysis:
The appellant, engaged in manufacturing insecticides and MS Ingots, filed a refund claim for unutilized CENVAT Credit upon closing down their manufacturing operations. The Revenue rejected the refund claim citing it did not fall under any category in Section 11B of the Act. The eligibility of the appellant for a refund was not disputed. Section 11B outlines the procedure for refund applications, emphasizing adherence to sub-section (2) conditions. Notably, Rule 5 of the CENVAT Credit Rules does not address refunds when a unit shuts down. The legislative intention prohibits reading into provisions what is not explicitly stated. The absence of a provision against refunds for closed units implies the Revenue must credit the unutilized credit to the Fund if not refunded. The judgment cites the Hon'ble High Court of Rajasthan's decision, emphasizing the necessity to maintain judicial discipline and follow precedent. The Tribunal's duty is to adhere to High Court judgments, and the denial of the refund in this case was deemed incorrect based on settled legal principles.

The Tribunal set aside the impugned order and directed the Adjudicating Authority to process the refund claim in accordance with the law, ensuring any consequential benefits are granted. The appeal was allowed based on the settled legal principles and the necessity to follow established judicial discipline.