Custom, Excise & Service Tax Tribunal
M/S Scan Synthetics Limited vs Cce, Jaipur I on 17 May, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV DATE OF HEARING : 17/05/2016. DATE OF DECISION : 17/05/2016. Excise Appeal No. 2582 of 2007 [Arising out of the Order-in-Appeal No. 177 (GRM)/CE/JPR-I/2007 dated 26/06/2007 passed by The Commissioner (Appeals), Customs & Central Excise, Jaipur.] For Approval and signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would 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 :Seen copy of the order? 4. Whether order is to be circulated to the :Yes Department Authorities? M/s Scan Synthetics Limited Appellant Versus CCE, Jaipur I Respondent
Appearance Shri Ankit Totuka, Advocate for the appellant.
Shri M.R. Sharma, Authorized Representative (Jt. CDR) for the Respondent.
CORAM : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 51831/2016 Dated : 17/05/2016 Per. Archana Wadhwa :-
The appellants are engaged in the manufacture of Textured Yarn and Dyed Yarn. Prior to 01/4/2006, the appellant was availing the Cenvat credit of duty paid on the inputs, which was being utilized by them for payment of duty of their final product at the concessional rate of 8% Ad-valorem under exemption Notification No. 29/2004-CE dated 09/7/2004. It is seen that there was another exemption Notification No. 30/2004-CE dated 09/7/2004, as amended, which allowed total exemption to the appellants products, subject to the condition that no Cenvat credit of duty stands availed by them. The appellant continued to avail Notification No. 29/2004-CE and continued to take the Cenvat credit of duty paid on the inputs received by them till 01/4/2006, when they decided to shift to Notification No. 30/2004-CE. Accordingly, w.e.f. 01/4/2006 they started clearing their final product without payment of duty.
2. At the time of opting of Notification No. 30/2004-CE, the appellant was having certain inputs in their factory, in respect of which they reversed the Cenvat credit. However, even after reversing the Cenvat credit, there was accumulated credit to the extent of Rs. 1.10 crores approximately. The appellant filed a refund of the same with their Jurisdictional Central Excise officer, which stands denied by the Original Adjudicating Authority on the ground that there is no provision of law, allowing such refund of unutilized accumulated credit. In as much as the same was filed by the appellant in terms of provision of Rule 5 of Cenvat Credit Rules, the Adjudicating Authority observed that the said rule is applicable only to the refund of accumulated credit, in case of export of final product. In as much as the appellants final product was not being exported, the invocation of the said rule is inappropriate.
3. On appeal against the said order Commissioner (Appeals) rejected the appeal and upheld the impugned order of the Original Authority. Hence, the present appeal.
4. After hearing both the sides, we find that the legal issue involved is as to whether the appellant is entitled to the refund of the unutilized accumulated credit as on the date of their opting for the benefit of an exemption Notification No. 30/2004-CE dated 01/4/2006 which prohibited the availment of Cenvat credit. On being specifically asked as to under which provision of law the said refund claim stand filed by Assessee, learned Advocate is not in a position to pin-point to any specific provision of law allowing the Assessee to claim the refund of the accumulated Cenvat credit. His only reliance is to the provisions of Rule 5 of the Cenvat Credit Rules, which he fairly admits that are applicable only in case of export of the final product.
5. As per the Cenvat Credit Scheme, credit of duty paid on the inputs and used in the manufacture of the final product is admissible for further use of the said credit for discharge of duty on the final product. There is no provision either in the Cenvat Credit Rules or under the Central Excise Act allowing cash refund of such accumulated credit. Such cash refunds of the credit, which is meant for only further utilization in discharge of the duty of excise on the final product, would enrich the Assessee unjustifiably. The Tribunal being a creature of the Act, has to act within the framework of the Act and cannot go beyond that. In the absence of any provision specifically permitting the refund of such credit, in cash, the same cannot be allowed on the basis of equity, justice and good conscious. In the absence of any such rule or provision of law, which learned Advocate has also been unable to show us, we find no justifiable reasons to grant the refund of the said credit.
6. Learned Advocate has strongly relied upon the Honble Karnataka High Court decision in the case of Union of India vs. Slovak India Trading Co. Pvt. Ltd. reported as 2006 (201) E.L.T. 559 (Kar.). By observing that Rule 5 of Cenvat Credit Rules does not expressly prohibited refund of unutilized credit when the Assessee factory was closed, refund stands allowed by the Honble High Court. However, learned DR has brought to our notice Larger Bench decision of the Tribunal in the case of Steel Strips vs. CCE, Ludhiana reported as 2011 (269) E.L.T. 257 (Tri. LB). The said decision of the Honble Karnataka High Court stands considered by the Larger Bench in the above judgment and its stands held as under :-
5.6 No doubt there are cases where Honble Supreme Court while dismissing Revenues Civil appeal did not go into merits of the issues but had dismissed the appeal only on the ground that there was no appeal by Revenue previously on similar cases. But it has been held by Apex Court in the case of CCE, Raipur vs. Hira Cement reported in 2006 (194) E.L.T. 257 (S.C.) = 2007 (8) S.T.R. 96 (S.C.) that non-filing of an appeal against an order in any event would not be a ground for refusing to consider the matter on its own merit. Merely because in some cases revenue has not preferred appeal that does not operate as a bar for the revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher Court when divergent views are expressed by the Tribunals or the High Courts as has been held in the case of C.K. Gangadharan vs. CIT, Cochin reported in 2008 (228) E.L.T. 497 (S.C.) = 2009 (16) S.T.R. 659 (S.C.). In Gauri Piasticulture (P) Ltd. (supra) except the claim being permitted under equitable considerations the controversy remained unanswered on the point of law while grant of refund of the nature claimed was not mandate of the Act or the 1994 Rules. The issue, therefore is rightly called for consideration in the present reference on the point of law.
Policy of Refund of Input Credit is Regulated by Statutory Provisions Learned Advocate for the appellant submits that at the time Larger Bench decision was given, the Honble Karnataka High Court decision was not upheld. At this stage learned Advocate also brings to our notice another decision of the Single Member Bench of the Tribunal in the case of CCE & ST, Lucknow vs. Jai Ganpati Metals reported as 2015 (322) E.L.T. 730 (Tri. Del.), wherein the refund of the unutilized credit stands granted by following the Honble Karnataka High Court decision in the case of Union of India vs. Slovak India Trading Co. Pvt. Ltd. (supra). On going through the said decision of the Single Member Bench, we find that the Tribunal has simplicitor relied upon the Honble Karnataka High Court decision and has observed that High Court decision has to be preferred to the Larger Bench decision of the Tribunal and it is the High Court decision which shall prevail over the decision of the Tribunal.
7. While there can be no dispute that the decision of the Honble High Court would prevail, in case of dispute with the Tribunals decision but we find that Larger Bench decision of the Tribunal, which has resolved the disputed issue in favour of the Revenue, was duly aware of the Honble Karnataka High Court decision, as confirmed by the Honble Supreme Court. As such, the Larger Bench decision stands given by considering the Honble Karnataka High Court, and subsequent confirmation of the same by the Honble Supreme Court. Further, Tribunal being a creature of the Statute cannot go beyond the provisions of the Act and cant exercise power which are not available to it like writ jurisdiction powers. Judicial discipline requires us to follow the law declared by the Larger Benchs of the Tribunal. We also note that the insistence of the learned Advocate on the fact that appeal filed by the Revenue before Honble Supreme Court in the case of Union of India vs. Slovak India Trading Co. Pvt. Ltd. (supra) stands dismissed by the Honble Supreme Court and as such it is the declaration of law by the Honble Supreme Court which should be followed, is not appropriate. Apart from the fact that the dismissal of the appeal by the Honble Supreme Court already stands taken note of by the Larger Bench, we also note that dismissal of appeal by the Honble Supreme Court was in view of the concession made by the learned ASG appearing for the Union of India. As such, it cannot be said that the Honble Supreme Court interpreted and declared the law in favour of the assessee.
8. In view of the foregoing discussions, we find no merits in the appellants case. The appeal is accordingly rejected.
(Dictated and pronounced in open court) (Archana Wadhwa) Member (Judicial) (B. Ravichandran) Member (Technical) PK ??
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