2025 (3) TMI 327 - AT - Central Excise

Cash refund of cenvat credit lying in balance under Rule 5 of the Cenvat Credit Rules 2004 consequent to closure of their factory - HELD THAT - he issue is no more res integra. Hon ble Bombay High Court initially taking note of the conflicting views on the subject referred the matter for resolution by Full Bench of the Hon ble Bombay High Court. The full Bench of the Hon ble Bombay High Court in the case of Gauri Plasticulture Pvt. Ltd. 2019 (7) TMI 1204 - BOMBAY HIGH COURT where Larger Bench of this Court disposed of all the three questions referred to it by Division Bench of this Court by answering the same in favour of the Revenue and against the Assessee. Conclusion - The cash refund of accumulated cenvat credit lying in account on the date of closure of factory in the appellant s case cannot be admissible. Appeal dismissed.

Summary

The appeal in this case was filed against a decision by the Commissioner of Central Excise (Appeals-I), Bangalore, rejecting the appellant's refund claim of cenvat credit amounting to Rs.1,48,49,124 under Rule 5 of the Cenvat Credit Rules, 2004 following the closure of their factory. The key issue in this case was whether cash refund of accumulated cenvat credit could be allowed under Rule 5 of CCR 2004 or under Section 11B of the Central Excise Act, 1944 upon closure of the factory.The appellant, a manufacturer of wheel rollers, saw blades, and segments, sought a refund of the unutilized cenvat credit after closing their manufacturing operations. The appellant's representative argued that the accumulated credit was a result of removals to 100% Export Oriented Units (EOUs) and exports against domestic removals. Despite citing various judgments, including the case of UOI Vs. Slovak India Co. Pvt. Ltd., where refunds of accumulated cenvat credit on closure of the factory were allowed, the refund claim was rejected by the Commissioner (Appeals).On the other hand, the Revenue's representative referred to the decision of the Larger Bench of the Tribunal in the case of Steel Strips Vs. CCE, Ludhiana, which held that refunds of accumulated cenvat credit could not be allowed upon closure of the factory. The Revenue also highlighted the decision of the Larger Bench of the Hon'ble Bombay High Court, which concluded that cash refund of accumulated cenvat credit on closure of the factory was not permissible under Rule 5 of CCR, 2004 or Section 11B of the CEA, 1944.After considering the arguments from both sides and reviewing the relevant legal provisions and precedents, the Appellate Tribunal upheld the decision rejecting the appellant's refund claim. The Tribunal relied on the decision of the Larger Bench of the Hon'ble Bombay High Court in the case of Gauri Plasticulture Pvt. Ltd., which clarified that cash refund of accumulated cenvat credit upon closure of the factory was not admissible. The Tribunal concluded that the appeal lacked merit and, therefore, rejected it.In summary, the key issue addressed in this judgment was whether cash refund of accumulated cenvat credit could be allowed under Rule 5 of CCR 2004 or Section 11B of the CEA, 1944 upon the closure of a factory. The Tribunal's decision was based on the interpretation of relevant legal provisions and precedents, ultimately leading to the rejection of the appellant's refund claim.