Custom, Excise & Service Tax Tribunal
Delta Power Solutions India Pvt. Ltd vs Commissioner Of Central Excise on 1 December, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/41482/2016
[Arising out of Order-in-Appeal No.417/2015 (CXA-II) dt. 21.12.2015 passed by the Commissioner of Central Excise (Appeals-II), Chennai]
Delta Power Solutions India Pvt. Ltd.
Appellant
Versus
Commissioner of Central Excise,
Puducherry Respondent
Appearance:
Shri Joseph Prabakar, Advocate For the Appellant Shri L. Paneerselvam, AC (AR) For the Respondent CORAM:
Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing/decision : 1.12.2016 FINAL ORDER No.42399/2016 Issue in appeal relates to denial of refund claim filed by the appellant on 18.7.2013 for an amount of Rs.40,51,961/- under Rule 5 of Cenvat Credit Rules, 2004 and Notification No.27/2012-CE (NT) dt. 18.6.2012 on the ground that cenvat credit taken could not be utilized by them. Original authority disallowed the claim on the grounds that the claim had been filed after a lapse of one year after the date of which the goods have been exported. On appeal, Commissioner (Appeals) vide its order dated 21.12.2015 upheld the order of lower authority. Appellant approached the Honble High Court of Madras in W.P.No.18834/2016 & WMP No.16442/2016. The Honble High Court in their order dt. 6.6.2016, while holding that the writ petition is not maintainable before the court at this juncture, liberty is granted opportunity to the petitioner to approach the Tribunal inter alia noted that the matter pertains to refund claim and the specific contention of the petitioner is that they have closed down the business activities. The Honble High Court also observed as follows :
"3. The learned counsel for the petitioner fairly concedes that though they had pleaded in the reply to the show cause notice dated 10.10.2013, that due to some unforeseen reasons they had discontinued the manufacturing activities and vacated the premises at Pondicherry and the said fact though noted by the Original Authority, while considering their case, the same was not canvassed before the Original Authority before passing the order dated 24.03.2014 and the petitioner was carried away by only canvassing the case relating to the inapplicability of the notification, which resulted in an order of rejection of the Refund Application. Further, the learned counsel for the petitioner would fairly state that even before the Appellate Authority the aforesaid point was not specifically raised and certain other grounds were urged, which resulted in rejection of the Appeal. Therefore, the petitioner has filed this Writ Petition challenging the impugned order passed by the Appellate Authority dated 21.12.2015.
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5. The petitioner need not have any apprehension in this regard. Even at the first instance, in their reply dated 26.11.2013, to the show cause notice dated 10.10.2013, they have set out averments regarding the closure of their manufacturing activities and those averments were referred to by the Original Authority in paragraph No.5 of its order dated 24.3.2014."
Accordingly, the appellants are before this forum.
2. Today on the date of hearing, Ld. Advocate Shri Joseph Prabhakar, appearing for the appellant, submitted that the refund claim was in fact filed only for accumulated credit owing to closure of the factory. However, as there was no procedure for claiming of such refund under Cenvat Credit Rules, 2004 or Finance Act, 1994, they filed the claim under Rule 5 of the Rules and Notification No.27/2012-CE (NT). He drew attention to the following chart in page-7 of the appeal :
Date/Period Event July 2011 to September 2011 Export of finished goods and Inputs 01.06.2013 Date of reversal of credit 01.07.2013 Date of closure of factory 18.07.2013 Date of filing Application for refund.
3. Ld. Advocate submitted that due to unavoidable circumstances, the factory was closed on 1.7.2013 and as the appellant intended to avail refund of the unutilized credit at the time of closure, they had reversed the credit available in their books of accounts on 1.6.2013 and had subsequently filed application for refund on 18.7.2013. Ld. Advocate submitted that this aspect was mentioned in their reply dt. 2.12.2013 to SCN dated 10.10.2013 as admitted before the Honble High Court, which was neither canvassed by them in the adjudication and appellate proceedings, nor was it taken due cognizance by the original authority and lower appellate authority. He reiterated that the claim was only for refund of accumulated credit at the time of closure of factory and not in relation to accumulated credit owing to exports. He therefore drew my attention to judgement of Honble High Court of Karnataka in the case of UOI Vs Slovak India Trading Co. P. Ltd. 2008 (10) STR 101 (Kar.) wherein the Honble High Court held that the Tribunal was right in ordering that refund of accumulated credit arising due to closure of factory is right and there was no express prohibition in Rule 5 of CCR 2002. He also pointed out that the said ruling had been confirmed by the Honble Supreme Court reported in 2008 (223) ELT A170 (SC) wherein SLP filed by department had been dismissed and submitted that the law is well settled in the matter. Ld. Advocate submitted that there is no express prohibition in terms of Rule 5 of the Rules and therefore refund claim for unutilized credit owing to closure is very eligible in their case. Ld. Advocate also submits that CESTAT Chennai inter alia relying upon Slovak India Trading judgement (supra), and the decision of Honble Andhra Pradesh Court in CCE & ST Hyderabad Vs Apex Drugs & Intermediates Ltd. 2015 (322) ELT 834 (AP) has held that refund under Rule 5 of the Rules is admissible for accumulated credit on account of closure of factory, which decision was reported in 2016-TIOL-2199-CESTAT-MAD [Computer Graphics Ltd. Vs CCE Tirunelveli].
4. On the other hand, Ld. A.R Shri L. Paneerselvam, AC, appearing for Revenue, vehemently opposed the appeal and submitted that whereas the export had been effected during the period July 2011 to September 2011, the refund application for accumulated credit thereof was filed only on 18.7.2013. That would fall foul of the period of limitation for filing such claim prescribed in the said notification. Hence there was no infirmity in the impugned order and consequently no merit in their appeal.
5. Heard both sides and gone through the facts. Appellants own admission is recorded by the Honble High Court of Madras in their order dt. 8.6.2016 referred to supra. The fact that the refund claim was on account of the credit accumulated due to closure of the factory, is not adequately canvassed before the original authority and lower appellate authorities. I find that the original authority in page-18 has taken note of the submissions of the appellant in para-5 of his order. Nonetheless, the claim for refund has been rejected on the ground that they are not conforming to the conditions laid down in Rule 5 of the Rules read with Notification No.27/2012-CE (NT). In fact, in my opinion, whether or not the appellant had effected exports prior to the closure of the factory, would not make any difference to a claim for refund which is filed on account of the closure of the factory. This is not a case where the appellants are still functioning, andrefund claim of accumulated credit accrued due to exports has been filed belatedly. On the other hand, this is a situation where the appellant has closed down the factory, however, in the absence of any other provisions for claim of credit at the time of closure they filed refund claim, under same Rule 5, after conforming to the requirement of Notification No.27/2012 requiring reversal of such credit. In any case, the matter at hand is fully covered by the ratio of the judgement of Honble Karnataka High Court in the case of Slovak India Trading cited supra, which has been confirmed by the Honble Apex Court. In view of this, I am of the considered opinion that since unutilized credit lying in the books of account on account of closure of factory should not be denied only on account of that they did not meet other procedural requirements of Rule 5 of the Rules read with Notification No.27/2012, The refund is therefore very much admissible. The matter is, however, remanded back to the original authority only for the limited purpose of ascertaining the correct amount of eligible accumulated credit that remained unutilized on account of such closure.
6. Appeal is allowed by way of remand to the Adjudicating Authority with above directions.
(Dictated and pronounced in open court) (MADHU MOHAN DAMODHAR) MEMBER (TECHNICAL) gs 7