2017 (2) TMI 299 - AT - Central Excise

Tribunal grants refund for unutilized Cenvat credit on exports, emphasizing Rule 5 provisions

The Tribunal allowed the appeal, setting aside the Commissioner(Appeals)'s decision to deny the refund claim for accumulated Cenvat credit against the ... Refund claim - cenvat credit - Rule 5 read with N/N. 11/2002-CE(NT) dated 1-3-2002 - denial on the ground that appellant have not justified that why accumulated credit was not utilized for the domestics clearances - Held that: - From the plain reading of the Rule 5, it is provided that for any reason adjustment of the credit is not possible, the refund shall be granted to the assessee against the export of the goods, therefore Commissioner(Appeals) had no jurisdiction to question the appellant that why credit could not be utilized for clearance of the goods for home consumption. The only condition is required that if there is accumulated Modvat credit in the modvat account and goods have been exported, modvat credit attributed to the export of goods should be refunded in terms of Rule 5 - refund allowed - appeal allowed - decided in favor of appellant. Issues:Refund claim under Rule 5 read with Notification No. 11/2002-CE(NT) dated 1-3-2002 for accumulated Cenvat credit against the export of goods denied by Commissioner(Appeals) on the ground of unutilized credit. Whether accumulated credit not being utilized for domestic clearances justifies denial of refund claim.Analysis:The appellant filed a refund claim under Rule 5 for accumulated Cenvat credit against the export of goods for the quarter January to March, 2004. The Commissioner(Appeals) denied the refund claim stating that the appellant failed to justify why the accumulated credit was not utilized for domestic clearances. The appellant appealed against this decision, arguing that the accumulated credit exceeded the refund claimed, indicating that the credit was unutilized and lying in the modvat account. The appellant relied on several judgments to support their case, emphasizing that the refund should not be denied solely based on the unutilized credit. The Ld. Counsel contended that Rule 5 allows for refund if the credit cannot be adjusted, regardless of its utilization for home consumption clearances.The Tribunal carefully considered the submissions from both parties and analyzed Rule 5, which provides for refund of Cenvat credit if the adjustment of credit is not possible. The Tribunal noted that the Commissioner(Appeals) exceeded jurisdiction by questioning why the credit was not utilized for home consumption clearances, as Rule 5 only requires accumulated Modvat credit to be refunded if goods have been exported. The Tribunal found that the judgments cited by the Ld. Counsel were directly applicable to the present case, supporting the appellant's claim for refund. Consequently, the impugned order was set aside, and the appeal was allowed with directions for the adjudicating authority to process the refund within three months from the date of the order.