2023 (7) TMI 386 - AT - Central Excise

Cash Refund of unutilzed credit - closure of the factory - rejection on the grounds that no provision regarding the cash refund of unutilzed Cenvat Credit at the time of surrender of Central Excise Registration is available under Cenvat Credit Rules or Central Excise Rules - HELD THAT - In the present matter the appellant has taken specific stand that due to difference in rate of duty on inputs and finished goods and export of goods under Bond and LUT, the cenvat credit get accumulated and it was not possible for them to adjust the said CENVAT credit due to closure of the their manufacturing activity and subsequently surrendering their central excise registration certificate -The adjudicating authority in the impugned matter observed that the refund of the appellant does not fall under any of the rules and that there are no express or implicit provisions in the Central Excise Act and Cenvat Credit Rules for grant of refund of Cenvat credit balance lying unutilized at the time of closure of the unit. In case of export of goods under bond and LUT without payment of duty, manufacturer is entitled to claim refund of cenvat credit accumulated unutilized on export of finished goods. However the said facts require verification, therefore without giving any finding on merit on the disputed refund claim we remand the matter back to the original authority for deciding the impugned matter afresh. Appeal allowed by way of remand.

Summary

Issues involved:
The issue in this case revolves around the rejection of a refund claim for unutilized Cenvat credit at the time of surrender of Central Excise Registration. The main contention is whether the appellant is entitled to a refund under the Cenvat Credit Rules or Central Excise Rules.

Detailed Summary:

Issue 1: Refund of unutilized Cenvat credit at the time of factory closure
The appellant filed a refund claim for unutilized Cenvat credit upon closing their factory and surrendering their registration. The claim was rejected by the jurisdictional Assistant Commissioner citing the absence of provisions for cash refund in the rules. The appellate authority also upheld the rejection. The appellant argued that the closure of the factory prevented them from utilizing the accumulated credit balance. They relied on various judgments to support their claim. The Departmental Representative reiterated the findings of the impugned orders.

Judgment: The Tribunal noted the appellant's argument regarding the accumulation of credit due to differences in duty rates and export activities. While acknowledging the lack of specific provisions for refunds upon closure, the Tribunal highlighted that manufacturers can claim refunds for accumulated credits on exports without duty payment. To verify the facts, the Tribunal remanded the matter back to the original authority for a fresh decision, refraining from expressing any opinion on the merits.

Outcome: The appeal was allowed for remand to the original adjudicating authority for a fresh decision after providing the appellant with a personal hearing opportunity. The Tribunal kept all issues open for consideration without making a definitive ruling on the refund claim.

This summary encapsulates the key arguments, findings, and the ultimate decision of the Appellate Tribunal CESTAT AHMEDABAD regarding the rejection of a refund claim for unutilized Cenvat credit at the time of factory closure.