2018 (5) TMI 1451 - AT - Central Excise

Manufacturer wins cash refund in CENVAT credit case overturning earlier rejection

The appellant, a manufacturer of readymade garments, sought a refund of CENVAT credit that was paid/reversed due to improper documentation. Despite the ... Cash refund - appellant was not in a position to utilize the CENVAT credit - Held that: - the issue involved in the present case is squarely covered in favour of the appellant by the decision of Uttrakhand High Court in the case of CCE, Meerut-l Vs. Apco Pharma Ltd. [2011 (10) TMI 38 - UTTARAKHAND HIGH COURT] wherein it has been held that refund could be sanctioned in cash when the assessee is unable to use it - appeal allowed - decided in favor of appellant. Issues:1. Appeal against dismissal of appeal by Commissioner(Appeals) regarding refund of CENVAT credit.2. Entitlement to cash refund when unable to utilize CENVAT credit.Issue 1: Appeal against dismissal of appeal by Commissioner(Appeals) regarding refund of CENVAT credit:The appellant, a manufacturer of readymade garments, availed CENVAT credit on certain improper copies of documents during the initial period of the new levy. Upon realizing the mistake, the appellant paid/reversed the credit with interest. Subsequently, the original duty paying documents were located, and the appellant sought refunds for the duty paid/reversed during 2012 within the stipulated period. Following changes in the duty levy on readymade garments, the appellant surrendered registration, which was later rejected. A remand order by the Commissioner(Appeals) led to the sanction of the refund as CENVAT credit in 2016, even though the refund was claimed in 2012 when the appellant could not utilize it. The appellant appealed the rejection of their appeal before the Commissioner(Appeals.Issue 2: Entitlement to cash refund when unable to utilize CENVAT credit:The appellant contended that the impugned order was unsustainable as it contradicted binding judicial precedents indicating that when an assessee is unable to utilize CENVAT credit, they are entitled to a cash refund. The appellant cited several decisions to support this argument. The learned counsel for the appellant emphasized that the Tribunal consistently held that if an assessee cannot utilize the credit, they should receive a cash refund. The learned AR defended the impugned order. Upon considering the submissions and the cited decisions, the Judicial Member found that the issue was squarely covered in favor of the appellant by a decision of the Uttrakhand High Court. The High Court's decision established that a refund could be sanctioned in cash when the assessee is unable to use it. Consequently, the impugned order was deemed unsustainable and set aside, allowing the appeal of the appellant.