2008 (9) TMI 777 - AT - Central Excise

Tribunal upholds denial of refund claim due to improper credit utilization.

The Tribunal upheld the Commissioner (Appeals)' decision to reject the appellant's refund claim under Rule 5 of Cenvat Credit Rules, 2004. The appellant's ... Refund - Cenvat/Modvat Issues involved: Appeal against rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004.The appellant filed an appeal against the rejection of a refund claim of Rs. 2,47,402 under Rule 5 of Cenvat Credit Rules, 2004. The appellant had initially filed a refund claim of Rs. 45,76,731 under Notification No. 11/2002- CE (NT) for credit availed on inputs used in the manufacture of exported goods. The adjudicating authority sanctioned a refund of Rs. 43,29,329, and the appellant appealed for the balance amount, which was rejected by the Commissioner (Appeals), leading to this appeal.The appellant's representative argued that the Commissioner (Appeals) wrongly focused on a one-to-one correlation between input and finished goods, which is not mandated by the Cenvat Credit scheme. It was highlighted that the appellant had a significant balance in their Cenvat account during the period when the credit was utilized, and the goods were exported later.The Departmental Representative supported the Commissioner (Appeals)'s decision, emphasizing that the inputs were received and credit utilized for home consumption during 2002-2003, while the goods were exported in 2005. It was contended that since credit was availed on inputs used for home consumption, the appellant was not eligible for a refund.Upon review of the facts and relevant rules, it was observed that the appellant had indeed used the credit on inputs for payment of duty on final products cleared for home consumption, as evidenced by the return filed for the relevant period in 2003. As per Rule 5 of the Cenvat Credit Rules 2004, refund of credit is allowed only when adjustment towards duty payment on final products for home consumption is not feasible. Therefore, the appellant was deemed ineligible for the refund amount.Consequently, the Tribunal found no grounds to overturn the decision of the Commissioner (Appeals) and dismissed the appeal.