Tribunal allows refund of unutilized Cenvat Credit on factory closure

M/s. Usha Martin Limited Versus Commissioner of Customs, Central Excise & Central GST, Agra

M/s. Usha Martin Limited Versus Commissioner of Customs, Central Excise & Central GST, Agra - TMI Issues:
1. Entitlement to refund claim of unutilized Cenvat Credit on closure of factory.
2. Applicability of Central Excise Rules for grant of refund.
3. Legal precedent set by High Courts and Supreme Court in similar cases.
4. Challenge to the High Court's order and pending appeal in the Apex Court.

Analysis:

Issue 1: Entitlement to refund claim of unutilized Cenvat Credit on closure of factory
The appellant, engaged in manufacturing TMT Bars, applied for a refund claim of unutilized Cenvat Credit upon closing the factory. The Central Excise Act and Cenvat Credit Rules did not explicitly provide for such refunds. A show cause notice was issued rejecting the claim, leading to the appeal before the Tribunal.

Issue 2: Applicability of Central Excise Rules for grant of refund
The Tribunal considered the absence of provisions in the Central Excise Act regarding refunds for unutilized Cenvat Credit. The appellant's claim was denied based on this absence. However, legal arguments were presented regarding entitlement to such refunds based on judicial precedents.

Issue 3: Legal precedent set by High Courts and Supreme Court in similar cases
The appellant cited judgments by the High Court of Karnataka and the Supreme Court, along with the Allahabad High Court's decision in Modipon Ltd. v Commissioner, supporting the refund claim of unutilized Cenvat Credit. These decisions formed the basis of the appellant's argument for entitlement to the refund.

Issue 4: Challenge to the High Court's order and pending appeal in the Apex Court
The Revenue challenged the Allahabad High Court's decision in Modipon Ltd., which was admitted for appeal in the Apex Court. The appellant argued for the refund claim based on the existing High Court order until any contrary decision by the Apex Court.

The Tribunal, considering the precedents and absence of a stay on the High Court's decision in Modipon Ltd., ruled in favor of the appellant. Citing the decision in Principal Commissioner, Central Excise Delhi v Space Telelink Ltd., the Tribunal held that unless an order is set aside, its sanctity remains. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, affirming the appellant's entitlement to the refund claim of unutilized Cenvat Credit on closure of the factory.