Tribunal orders refund of excise duty paid from Cenvat credit in cash

The Tribunal allowed the appeal, directing the refund of the Excise duty amount paid from Cenvat credit in cash. The appellant's activities did not amount to manufacture, and as they were unable to utilize the credit due to not undertaking any dutiable activities, the refund was ordered to be paid in cash, setting aside the impugned order.

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Issues:
1. Whether the appellant is entitled to a refund of the Excise duty paid by utilizing Cenvat credit for activities not amounting to manufacture.
2. Whether the refund should be allowed in cash or re-credited to the modvat account.

Analysis:
1. The appellant, a Government of Madhya Pradesh undertaking engaged in electricity production and tower erection activities, paid Excise duty under protest for activities like cutting, drilling, welding, etc., on iron and steel products. The Tribunal earlier held these activities did not amount to manufacture. The dispute arose regarding the refund of Rs. 63,30,263 paid using Cenvat credit. The authorities rejected the refund, arguing the duty was paid when the activities were not liable to duty. The appellant contended that since the activities were not manufacturing, the duty should be refunded. The Tribunal agreed, emphasizing the duty paid under protest should be refunded, including the amount paid from the Cenvat credit.

2. The appellant argued that since they are not undertaking any dutiable activities currently, re-crediting the refund to the modvat account serves no purpose and requested a cash refund. The authorities rejected the refund, stating it was paid from the Cenvat credit. The Tribunal held that there is no legal bar on cash refund of duty paid via Modvat/Cenvat credit. Citing the Central Excise Act and precedents, the Tribunal emphasized that no distinction is made between duty paid in cash or credit. As the appellant cannot utilize the credit and no dutiable activities are being carried out, the refund was ordered to be paid in cash, setting aside the impugned order.

In conclusion, the Tribunal allowed the appeal, directing the refund of the Excise duty amount paid from Cenvat credit in cash, based on the appellant's activities not amounting to manufacture and the inability to utilize the credit.

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