Custom, Excise & Service Tax Tribunal
Modipon Fibres Co vs Cce, Ghaziabad on 18 December, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
COURT-III
Excise Appeal No.E/853/2009-EX[DB]
[Arising out of Order-in-Appeal No.309-CE/GZB/2008 dated 30.12.2008 passed by the Commissioner (Appeals), Central Excise & Service Tax, Meerut-I]
For approval and signature:
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
1. Whether Press reporters may be allowed to see the
order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
authorities?
__________________________________________________
Modipon Ltd.(Formerly known as
Modipon Fibres Co. Appellant
Vs.
CCE, Ghaziabad Respondent
Present for the Appellant : Shri.S.S. Dabas Advocate
Present for the Respondent: Shri.M.S.Negi, DR
Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing/Decision: 18/12/2014
FINAL ORDER NO. _______________
PER: RAKESH KUMAR
The appellants are manufacturers of Nylon filament yarn Chargeable to Central Excise duty. They availed cenvat credit of central excise duty paid on inputs and capital goods used in or in relation to manufacture of final product as per the provisions of Cenvat credit Rules 2004. The appellants factory stopped production in June, 2007 and at that time they had accumulated cenvat credit of Rs.2,35,86,612/- in their RG 23A part II and RG 23C Part-II account. On 27/11/2007, the appellant filed refund claim invoking section 11 B (2)(C) of the Central Excise Act, 1944. The refund application mentions that the company has stopped production since June 2007 due to stiff competition, that the cenvat credit of Rs.2,35,86,612/- in its cenvat credit account is lying unutilized, that there is no possibility utilizing said credit in any near future as there is no chance of resumption of the operations of the factory and therefore the company requests refund of the cenvat credit under clause (C) of provisions of section 11B (2) of the Central Excise Act, 1944. Section 11B of Central Excise Act, 1944 is about refund of the duty and clause (c ) of Provisions of Section 11 B (2) provides that the bar of unjust enrichment would not be applicable to the refund of credit of duty paid on any excisable goods used as inputs in accordance with the rules made or any notification issued under this Act. The application, citing the judgment of Honble Karnataka High Court in case of UOI vs. Slovok India Trading Co. Pvt. Ltd. [2006 (201) ELT 559 (Kar.)] requested for cash refund of the unutilized cenvat credit of Rs.2,35,86,612/- under Rule 5 of the Cevat Credit Rules, 2004.
2. The refund claim was rejected by the Asstt. Commissioner vides Order-in Original dated 16.06.2008, against which the appellant filed an appeal to Commissioner (Appeals). The Commissioner (Appeals) vide order in appeal dated 30th December, 2008 rejected the appeal observing that the judgment of Honble Karnanataka High Court in the case of Slovak India Trading Co. Pvt. Ltd. (Supra) is not applicable to this case and that the cash refund under Rule 5 of the Cenvat Credit Rules,2004 is permissible only of the accumulated cenvat credit which is in respect of the inputs which have been used in or in relation to manufacture of finished goods which have been exported under bond/ letter of undertaking without payment of duty and which cannot be utilized for payment of duty on the goods cleared for home consumption or for payment of duty on the goods cleared for export under rebate claim. Against this order of the Commissioner (Appeals) this appeal has been filed.
3. Heard both the sides.
4. Shri S.S. Dabas, Advocate, the ld. Counsel for the appellant, assailed the impugned order by mainly relying upon Honble Karnataka High Court judgment in the case of Slovak India Trading Co. Pvt. Ltd. (supra) and pleaded that in terms of this judgment of Honble Karnataka High Court, there is no express prohibition in Rule 5 of the Cenvat Credit Rules, 2004 against permitting cash refund of the accumulated cenvat credit, that for cash refund of the accumulated cenvat credit, it is not necessary that the cenvat credit should be in respect of the inputs used in or in relation to manufacture of final products exported out of India without payment of duty under bond/LTU, that cash refund would be admissible, even if, a factory stops production and at the time of stopping of the production, some unutilized cenvat credit is lying in cenvat credit account, that he also relies upon the Tribunals judgment in the case of Raymond Ltd. Vs. CCE, Mumbai-III reported in 2011 (273) ELT 582, wherein the Tribunal held that the assessees would be eligible for the refund of unutilized accumulated credit on opting out of Modvat Scheme, excluding the reversed credit involved in inputs, work in process and finished goods lying in stock on the date of opting out of Modvat Scheme, and that in terms of Apex Court judgment in the case of Collector vs. Dai-Ichi Karkaria Ltd. [1999 (112) ELT 353 (S.C.), the credit once allowed to an assessee cannot become indefensible, as it is as good as tax paid. He, therefore, pleaded that impugned order is not correct.
5. Shri M.S. Negi, Ld. DR defended the impugned order by reiterating the findings of the Commissioner (Appeals) and cited the judgment of Larger Bench of the Tribunal in the case of Steel Strips Vs. Commissioner of C. Excise, Ludhiana reported in 2011 (269) ELT 257 (Tri.-LB), wherein it has been held that claim of refund is not a matter of right unless vested by law, and no injustice or hardship can be raised as plea to claim refund in absence of statutory mandate He also pleaded that the only provision for cash refund of the accumulated cenvat credit is Rule 5 of the Cenvat Credit Rules, 2004 and cash refund under this rule is permitted only of the cenvat credit which has accrued in respect of the input used in the manufacture of the finished goods which had been exported out of India under bond or LTU and which cannot be utilized for payment of duty on any goods cleared for home consumption or any goods cleared for export under rebate claim. He also pleaded that cash refund under Rule 5 of the Cenvat Credit Rules is also subject to various conditions specified in the Notification issued under this rule and one of the conditions which has to be satisfied is that the exports have not been made under draw back scheme or under input duty rebate claim, while in this case, there is no evidence that the cenvat credit sought to be refunded is in respect of exports out of India under bond and those exports have been made without claiming the duty draw back or input duty rebate. He also emphasized other than Rule 5 of the Cenvat Credit Rules, 2004, there is no other provision either in the Cenvat Credit Rules, 2004 or in Central Excise Rules, 2002 for cash refund of the accumulated cenvat credit. He, therefore, pleaded that there is no merit in this appeal.
6. We have considered the submissions from both the sides and perused the records. There is no dispute that the appellants factory stopped production sometime in June, 2007 and at that time there was cenvat credit balance of Rs.2,35,86,612/- in their RG 23 A part I and RT-23C pt. II account. In the appellants application dated 27.11.2007, cash refund of the above cenvat credit is sought by invoking Section 11 B (2) (C). In our view, section 11 B is only for the refund of the duty paid either through cash or through cenvat credit or of the cenvat credit wrongly reversed. While refund of duty paid either through cash or through cenvat credit account is subject to the bar of unjust enrichment, the refund of wrongly reversed cenvat credit is not subject to the bar or unjust enrichment. But this section cannot be invoked for cash refund of the unutilized cenvat credit lying in the cenvat credit account of a manufacturer at the time of closure of the factory. In fact, other than Rule 5 of the Cenvat Credit Rules, 2004, there is no provision either in Central Excise Act, 1944 or in any Rules made there-under for cash refund of accumulated cenvat credit Rules, 2004. When a factory closes down, the cenvat credit lying unutilized in its cenvat credit account would lapse, unless the factory resumes production. In the event of the factory being taken over by another person, and resuming production, Rule 10 permits the transfer of cenvat credit to the new owner subject to certain conditions. But there is no provision for cash refund of such unutilized credit.
7. Rule 5 of the cenvat credit rules permits cash refund of accumulated cenvat credit only in the following circumstances:-
(1). The cenvat credit which has accumulated and whose cash refund is sought is in respect of input /input service used in the manufacture of finished goods which have been exported out of India under bond or letter of undertaking or used in intermediate products cleared for export.
(2). The assessee is not in a position to utilize the cenvat credit for payment of duty on finished goods cleared for home consumption or cleared for export under rebate claim.
(3). The exports have not been made by claiming draw-back or input duty rebate.
8. In the present case, none of the above conditions are satisfied. Therefore, the Commissioner (Appeals) has rightly upheld the rejection of the cash refund of the accumulated credit. We are supported in our view of the Larger Bench judgment of the Tribunal in the case of Steel Strips (Supra).
9. In view of the above discussion, we do not find any merit in this appeal. The same is dismissed.
[Dictated & Pronounced in the open Court].
(S.K.MOHANTY) (RAKESH KUMAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) Anita ?? ?? ?? ?? 0 8