Custom, Excise & Service Tax Tribunal
Hitesh Plastics Pvt. Ltd vs C.C.E. & S.Tax, Vapi on 17 March, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, O-20, NMH Compound Ahmedabad Central Excise Appeal No.13844, 13845 of 2013-SM Arising out of the order-in-appeal No.300 & 301 13 14 dated 16.9.2013 passed by the Commissioner(Appeals), Customs, Central Excise & Service Tax, Vapi. Hitesh Plastics Pvt. Ltd .. Appellants Vs. C.C.E. & S.Tax, Vapi .. Respondent
Appearance:
Present Shri S.J. Vyas, Advocate for the appellants Present Shri A. Mishra, A.R. for the Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing/decision: 17.3.2017 Final Order No. Per Dr. D.M. Misra:
These two appeals are filed against the Order in-Appeal No. 300 & 301 13 14 dated 16.9.2013 passed by the Commissioner(Appeals), Customs, Central Excise & Service Tax, Vapi.
2. Briefly stated, the facts of the case are that the Appellants had filed a refund claim for Rs.49,303/- on 26.2.2013. The refund claim was granted by the Adjudicating Authority by re-credit in CENVAT Credit Account and not by cash. Aggrieved by the said order, the Appellants filed an appeal before the learned Commissioner (Appeals), who in turn, held that refund cannot be allowed in cash even in a situation where at the time of grant of refund the unit is either totally closed or it is not in a position to utilize the CENVAT credit for any reason. Against the said order, the appellant filed these appeals before this forum.
3. The learned Advocate Shri S.J. Vyas for the Appellant submitted that even though the Appellant was allowed refund, but direction to pay it by re-crediting their CENVAT account, is erroneous. It is his contention that their factory has been closed since 29.3.2013 and they had also surrendered excise registration, hence, the CENVAT credit account is not in operation. In such circumstances, refund of the amount through the CENVAT Credit account is as good as rejection of their claim. Therefore, refund of the said amount should be paid through cash. It is his contention that refund is admissible in cash when the factory has been closed has been settled by the decisions of this Tribunal in the case of Kochar Sung-up Acrylic Ltd 2010 (259) ELT 713 (Tri-Del), Ramji Packaging Pvt. Ltd 2013 (8) TMI 771-CESTAT Ahmedabad, Lohia Polyester Pvt. Ltd 2014 (313) ELT 435 (Tri-Ahmd), Bangalore Cables Pvt. Ltd 2016 (8) TMI 293-CESTAT Bangalore. Further, rebutting the Revenues argument that the issue is covered by the decision of the Larger Bench of the Tribunal in the case of Steel Strips Vs CCE Ludhiana 2011 (269) ELT 257 (Tri-LB), the learned Advocate submits that once the credit is utilized for payment of duty, the nature of credit is changed and it becomes duty and it is the duty which has been sought as refund. Further, it is contended that the nature of duty does not undergo any change, depending upon the mode of payment, i.e. either through PLA or through credit. The CENVAT credit when utilized for payment of duty, it had acquired the nature of duty. Distinguishing the decision of the Larger Bench in Steel Strips Pvt. Ltd case (supra), the learned Advocate submitted that the issue before the Bench was refund of credit of unutilized amount in cash. The credit remained unutilized since the Department had forced the Assessee to pay the duty through PLA. In such scenario, the Larger Bench observed that the credit was never utilized for payment of duty and such amount paid as duty was not involved in the claim of refund. He has vehemently argued that the facts in the present case, therefore, are not comparable, accordingly, eligible to refund under Section 11B of Central Excise Act, 1944. Similarly, the learned Advocate sought to distinguish the judgment of this Tribunal in the case of Saroj Metal Works Pvt. Ltd VS CCE Bhopal - 2005 (189) ELT 435 (Tri-Del), Birla Corporation Ltd Vs CCE Pune-I 2011 (274) ELT 529 (Tri-Mum).
4. Per contra, the learned Authorized Representative for the Revenue Shri A. Mishra submitted that in the case of Gauri Plasticulture (P) Ltd Vs CCE Indore 2006 (202) ELT 199 (Tri-LB), the Hon'ble Larger Bench on the principle of equity, justice and good sense, allowed the refund of unutilized credit, but it cannot be interpreted that a blanket sanction of refund by cash in all circumstances be allowed. It is his further contention that the Larger Bench though over-ruled the judgment of the Tribunal in Purvi Fabrics & Texturise (P) Ltd Vs CCE Jaipur-II 2004 (172) ELT 321 (Tri-Del), but on appeal against the order, the Hon'ble Supreme Court upheld the view of the Tribunal reported as Purvi Fabrics & Texturise P Ltd Vs CCE Jaipur-II 2015 (319) ELT 551 (SC); observing that the claim of refund of the amount in cash which has been rejected by the Tribunal also does not call for any interference. Further, the learned Authorized Representative referring to the subsequent judgment of Larger Bench in the case of Steel Strips case(supra) submitted that the Larger Bench has answered specifically the reference observing that in absence of any provisions of refund of CENVAT Credit by cash, except in case of export, as laid down under Rule 5 of CENVAT Credit Rules 2004, the same cannot be allowed. It is his contention that the judgment referred to by the learned Advocate in the case of Kochar Sung-up Acrylic Ltd (supra), Ramji Packaging Pvt. Ltd (supra), Lohia Polyester Pvt. Ltd (supra), Bangalore Cables Pvt. Ltd (supra), cannot be considered as good law being contrary to the judgment of Larger Bench in Steel Strips case (supra) and also the judgment of the Hon'ble Supreme Court upholding the Purvi Fabrics & Texturise P Ltd (supra). Therefore, the same cannot be considered as binding precedent.
5. Heard both sides and perused the records. The short question involved for determination is: whether the Appellants are entitled for refund amount in cash instead of credit in their CENVAT account, as directed by the learned Commissioner (Appeals). I find that the issue has been considered at length by the Larger Bench in Steel Strips case (supra). It is the contention of the learned Advocate that the circumstances involved in Steel Strips case (supra) are not comparable to the facts of the present case, hence cannot be relied upon. I do not find force in the said contention. The issue referred to the Larger Bench in view of the conflicting decisions on the subject, that is, whether the refund should be allowed in cash instead of crediting CENVAT Credit account, on closure of the factory. Specifically, the Larger Bench has taken note of its earlier decision in Gauri Plasticulture (P) Ltd. case (supra) on the subject, and after analyzing the principle of law settled on the subject, observed as follows:-
5.16?Modvat law has codified procedure for adjustment of duty liability against Modvat Account. That is required to be carried out In accordance with law and unadjusted amount is not expressly permitted to be refunded. In absence of express provision to grant refund, that is difficult to entertain except in the case of export. There cannot be presumption that in the absence of debarment to make refund in other cases that is permissible. Refund results in outflow from treasury, which needs sanction of law and an order of refund for such purpose is sine qua non. Law has only recognized the event of export of goods for refund of Modvat credit as has been rightly pleaded by Revenue and present reference is neither the case of otherwise due of the refund nor the case of exported goods. Similarly absence of express grant in statute does not imply ipso facto entitlement to refund. So also absence of express grant is an implied bar for refund. When right to refund does not accrue under law, claim thereof is inconceivable. Therefore, present reference is to be answered negatively and in favour of Revenue since refund of unutilized credit is only permissible in case of export of goods and for no other reason whatsoever that may be. As has been stated earlier that equity, justice and good conscience are the guiding factors for Civil Courts, no fiscal Courts are governed by these concepts, the present reference is bound to be answered in favour of Revenue and it is answered accordingly.
7. From the aforesaid observation of the Larger Bench, it is very much clear that the refund cannot be allowed in cash. Also, I find that a similar view has been expressed by the Division of the Tribunal in the case of Purvi Fabrics & Texturiser (P) Ltd (supra), which reads as under:
4. We have considered the submissions of both the sides. Central Excise Rules, 1944 earlier and now CENVAT Credit Rules provided for the credit of the duty paid on the inputs used in or in relation to the manufacture of the final product and duty paid on the capital goods. These rules provide that the Modvat Credit of the duty so availed is to be used towards payment of duty on any of the finished goods manufactured by the manufacturer or on the inputs/capital goods, if removed as such. The learned SDR is justified in making the submissions that Modvat Credit Rules do not contain any provision for the refund of the Modvat Credit in cash or by cheque except in cases where the inputs are used in the manufacture of goods which are exported out of India and manufacturer is not in a position to utilise the credit. The refund in cash is granted as an incentive measure to the exporter. We also find force in the submissions of the learned SDR that Section 11B of the Central Excise Act provides for payment of amount of refund to the Applicants only in situations specified in proviso to sub-section (2) of Section 11B of the Central Excise Act. Clause (c) of the said proviso refers to refund of credit of duty paid on excisable goods used as inputs in accordance with the Rules made, or any notification issued, under the Central Excise Act. The provisions of Central Excise Rules in this regard has already been discussed by us wherein except in the case of export of goods, in no other case refund of credit is permissible under the rules in cash or by cheque. The learned SDR has also distinguished the decisions relied upon by the learned Advocate. This Tribunal has considered the issue regarding refund of Modvat Credit in cash in the case of Rajashree Cements where the Tribunal has held as under :-
...........this is a Credit Account in which duty paid by the supplier of goods is credited so that the cascading effect of duty is wiped out. The Central Excise Rules permit the refund in cash of such duty only when the final goods are exported out of the country and the manufacturer is not in a position to utilise the credit towards payment of duty ..................... the refund amount is to be given in RG23A, Part II account, if the same is in operation. This finding of the Tribunal has been upheld by the Hon'ble Supreme Court.
8. In the result, I do not find any discrepancy in the impugned order. Consequently, the impugned order is upheld and the appeals, being devoid of merit, are dismissed. Appeals dismissed.
(Dictated and pronounced in the court) (Dr. D.M. Misra) Member (Judicial) scd/ Appeal No.E/13844, 13845/2013-SM 7