Custom, Excise & Service Tax Tribunal
Amar Tubes Pvt Ltd vs Cce Raigad on 14 February, 2020
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 87392 of 2016
(Arising out of Order-in-Appeal No. CD/499/RGD/2016 dated
23.06.2016 passed by the Commissioner of Central Excise (Appeals),
Mumbai-II)
M/s Amar Tubes Pvt. Ltd. .... Appellant
C/o Shri Amar K Sharma
802, Mahavir Amrut, B-Wing, palm Beach Road,
Sector-19, Sanpada, Navi Mumbai - 400705
Versus
Commissioner of Central Excise, Raigad .... Respondent
Kendriya Utpad Shulka Bhavan, Plot No. 1, Sector-17, KIhandeshwar, New Panvel - 410206 Appearance:
Shri V.M. Doiphode, Advocate for the Appellant Shri Anil Choudhary, DC, Auth. Representative for the Respondent CORAM:
HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO. A/85249/2020 Date of Hearing: 30.09.2019 Date of Decision: 14.02.2020 Per: Dr. D.M. Misra This is an appeal filed against Order-in-Appeal No. CD/499/RGD/2016 dated 23.06.2016 passed by the Commissioner of Central Excise (Appeals), Mumbai-II.
2. Briefly stated the facts of the case are that the appellant had filed a cash refund claim for Rs.1,44,47,255/- on 04.09.2015 of the unutilized CENVAT Credit lying in balance on the ground of closure of the factory. It is stated in the refund claim that the 2 CENVAT Credit lying in the balance as on date of closure of factory is refundable in cash to them under Section 11B of the Central Excise Act, 1944. A show-cause notice was issued to them on 09.11.2015 proposing rejection of the said claim. On adjudication, the claim was rejected both under Section 11B of Central Excise Act, 1944 as well as under Rule 5 of the CENVAT Credit Rules, 2004. Aggrieved by the said order, they filed an appeal before the learned Commissioner (Appeals), who in turn, rejected their refund claim. Hence, the present appeal.
3. Learned Advocate Shri V.M. Doiphode for the appellant has submitted that the appellant defaulted in making monthly payment of duty during April, 2011 and May, 2011, therefore, they were required to discharge duty on clearance of goods during the period April 2011 to October, 2011 in cash. Consequently, as per the direction of the Department, they paid a total amount of Rs.2,91,78,383/- with interest in cash for the clearances made during April, 2011 to October, 2011 even though for the said period duty was already paid by debiting their CENVAT account. Consequently, they filed a refund claim on 20.06.2012 seeking refund of the duty paid twice during the said period through cash as well as by debiting their CENVAT account. The adjudicating authority sanctioned a refund of Rs.1,79,86,516/- (after adjusting the amount of Rs.25,48,821/-) by crediting their CENVAT Credit account vide order dated 18.01.2013. Aggrieved by the said order, they filed an appeal before the learned Commissioner (Appeals), which is pending. Further, he has submitted that the appellant had applied for surrendering of the Central Excise registration as on 09.07.2015 3 due to closure of factory and consequently, they filed the present cash refund claim of Rs.1,44,47,255/- of the CENVAT Credit lying in balance. The adjudicating authority as well the learned Commissioner (Appeals) rejected the said claim.
4. The contention of the learned Advocate is that the judgment of larger Bench of Hon'ble Bombay High Court in the case of Gauri Plasticulture Pvt. Ltd. Vs. Commissioner of Central Excise, Indore - 2019 (30) GSTL 224 (Bom), is distinguishable and not applicable to the facts of their case. It is his contention that in the present case, the appellant had paid the duty in cash for the period April, 2011 to October, 2011, even though CENVAT Credit account was debited periodically during the said period in discharging their duty liability. It is not a case that the factory has been closed and they are unable to utilize the CENVAT Credit, hence, the refund in cash is claimed. It is his contention that since the use of credit has been denied to them and the appellants are forced to pay the duty by debiting their PLA account, then the refund of the amount paid through cash will be admissible to them during the period in question. It is his contention that this part of observation of the Larger Bench of this Tribunal in the case of Gauri Plasticulture Pvt. Ltd. - 2006 (202) ELT 199 (Tri-LB) has not been disturbed by the Hon'ble Bombay High Court. Therefore, the present accumulated credit on the date of closure of the factory being a consequence of discharging duty in cash for the period April, 2011 to October, 2011 even though CENVAT Credit account was utilized during the said period in discharging their monthly liability of payment of duty. The learned Advocate has further submitted that since 4 their appeal filed against rejection of refund claim in cash of Rs.1,79,86,516/- is pending before the learned Commissioner (Appeals), therefore, this appeal be also kept pending till the Commissioner (Appeals) decide the said refund claim.
5. Learned AR for the Revenue reiterates the findings of the learned Commissioner (Appeals). He has submitted that the appellant had filed the cash refund claim of Rs.1.44 crores under Section 11B of Central Excise Act, 1944 on account of closure of their factory as the said CENVAT Credit amount could not be utilized. However, they have changed their stand before the adjudicating authority claiming cash refund of the unutilized credit under Rule 5 of the CENVAT Credit Rules, 2004. The learned AR has submitted that the refund sanctioned by the adjudicating authority vide order dated 18.01.2013 by crediting their CENVAT Credit account is challenged before the learned Commissioner (Appeals) by the appellant requesting the said amount to be paid in cash has no bearing with the present appeal as the present appeal relates to refund of the CENVAT Credit lying unutilized due to closure of the factory. He submits that the issue is squarely covered by the larger Bench judgment of the Hon'ble Bombay High Court in the case of Gauri Plasticulture Pvt. Ltd. (supra).
6. We have carefully considered the submissions advanced by both sides. The undisputed facts are that the appellant has surrendered their Central Excise Registration certificate on 09.07.2015 and at the time of surrendering of their registration, the CENVAT Credit amount lying unutilized was Rs.1,44,47,255/- 5 , which they claimed to be refunded in cash, initially under Section 11B and later under Rule 5 of the CENVAT Credit Rules, 2004. The main argument of the appellant is that during the period April, 2011 to October, 2011, since they defaulted in making monthly payment of duty, consequently, Range Superintendent directed them to discharge duty through PLA without utilization of CENVAT Credit. Hence, the entire duty amount was later paid through cash in compliance with the Rule 8(3A) of the Central Excise Rules, 2002. But, since the Department forced them to pay duty in cash, even though they had paid through CENVAT Credit, therefore, on closure of the factory, the CENVAT Credit amount should be refunded to them in cash.
7. We do not find merit in the contention of the appellant inasmuch as the present refund claim arose four years after the compliance of the Rule 8(3A) of the Central Excise Rules, 2002 by discharging the duty in cash for which a separate proceeding has been initiated by claiming refund in cash before the adjudicating authority, which on rejection, appeal is pending before the learned Commissioner (Appeals) as claimed by the appellant. The present refund claim in cash arose as the CENVAT Credit amount was lying in balance as on date of closure of the factory. In our opinion, the issue is squarely covered by the larger Bench of the judgment of Hon'ble Bombay High Court in Gauri Plasticulture Pvt. Ltd. (supra). In framing the question of law, their Lordships observed as follows: -
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"a) Whether cash refund is permissible in terms of clause (c) to the proviso to section 11B(2) of the Central Excise Act, 1944 where an assessee is unable to utilize credit on inputs?
(b) Whether by exercising power under Section 11B of the said Act of 1944, a refund of unutilised amount of Cenvat Credit on account of the closure of manufacturing activities can be granted?
(c) Whether what is observed in the order dated 25th January, 2007 passed by the Apex Court in Petition for Special Leave to Appeal (Civil) No. CC 467 of 2007 (Union of India v. Slovak India Trading Company Pvt. Ltd.) can be read as a declaration of law under Article 141 of the Constitution of India?"
8. After analyzing the arguments and principles of law on the said issues and the judgment of the Karnataka High Court in the case of Union of India Vs. Slovak India Trading Co. - 2006 (201) ELT 559 (Kar), their Lordships observed as follows: -
40. As a result of the above discussion, we answer the questions of law framed above as (a) and (b) in the negative. They have to be answered against the assessee and in favour of the Revenue. Questions (a) and (b) having been answered accordingly, needless to state that the order of the Hon'ble Supreme Court in the case of Slovak India (supra) cannot be read as a declaration of law under Article 141 of the Constitution of India.
9. Following the aforesaid precedent, we do not find any reason for interfering with the order of the learned Commissioner (Appeals). Consequently, the impugned order is upheld and appeal is rejected.
(Pronounced in open court on 14.02.2020) (Dr. D.M. Misra) Member (Judicial) (Sanjiv Srivastava) Member (Technical) Sinha