Tribunal grants refund claim for surrendered Cenvat Credit upon factory closure

M/s. Shalu Synthetics Private Limited Versus CCE. & ST. Vapi

M/s. Shalu Synthetics Private Limited Versus CCE. & ST. Vapi - 2017 (346) E.L.T. 413 (Tri. - Ahmd.) Issues Involved:
Refund of accumulated Cenvat Credit upon surrender of central excise registration at the time of closure of the factory.

Detailed Analysis:

Issue 1: Refund Claim Rejection
The appellant closed their manufacturing activities and submitted a refund claim for unutilized Cenvat Credit. The claim was rejected by the adjudicating authority and also under Section 11B of the Central Excise Act, 1944. The first appellate authority upheld the rejection citing unjust enrichment due to duty paid on inputs included in the price of goods. The appellant argued citing settled law in various cases supporting the refund claim.

Issue 2: Interpretation of Law
The Departmental Representative referenced a Larger Bench judgment in the case of Steel Strips Vs. CCE, Ludhiana, which covered the issue of refund of accumulated credit on closure of a unit. The appellant contended that the first appellate authority's decision was contrary to established law as per the High Court of Karnataka's ruling in Union of India Vs. Slovak India Trading Co. Pvt. Ltd. The High Court held that Rule 5 of the Cenvat Credit Rules does not apply when there is no manufacture due to closure of the company, thus justifying the refund.

Issue 3: Judicial Precedence
The Tribunal considered the judgments of the High Courts of Karnataka and Bombay, which supported the appellant's claim for refund in similar circumstances. The Tribunal emphasized the importance of following High Court decisions over Tribunal orders, especially when the issues are identical. The Tribunal set aside the impugned order and allowed the appeal, granting the appellant consequential relief based on established legal principles.

In conclusion, the judgment favored the appellant's refund claim of accumulated Cenvat Credit upon surrendering central excise registration at the time of factory closure, citing relevant legal precedents and interpretations to support the decision.