2023 (2) TMI 230 - AT - Central Excise

Tribunal grants appellant refund of unutilized Cenvat credit for Education Cess

The Tribunal ruled in favor of the appellant, holding that they are entitled to a cash refund of the accumulated and unutilized Cenvat credit of Education ... Cash refund against the accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess - Time Limitation - HELD THAT:- The appellant have heavily relied upon various High Court decisions according to which refund was allowed considering Rule 5 of Cenvat Credit Rules, 2004. It is not disputed that the appellant are not in a position to utilize Cenvat credit of Education Cess and Secondary and Higher Education Cess due to introduction of GST with effect from 01.07.2017 - From the Rule, under clause (vi) and (via), the credit of Education Cess and Secondary and Higher Education Cess is clearly allowed. Therefore, the appellant is legally entitled for Cenvat of Education Cess and Secondary and Higher Education Cess. Hence, on this count refund cannot be denied. Time Limitation - HELD THAT:- The Hon’ble High Court in various cases also considered limitation and held that in case of refund of accumulated unutilized credit, limitation shall not apply - Reliance placed in the case of UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. [2006 (7) TMI 9 - KARNATAKA HIGH COURT] where it was held that There is no express prohibition in terms of Rule 5. Even otherwise, it refers to a manufacturer as we see from Rule 5 itself. Admittedly, in the case on hand, there is no manufacture in the light of closure of the Company. Therefore, Rule 5 is not available for the purpose of rejection as rightly ruled by the Tribunal. Accordingly the appellant is entitled for cash refund of accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess - appeal allowed. Issues Involved:1. Entitlement to cash refund of accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess.2. Whether the refund claim is time-barred.Issue-wise Detailed Analysis:1. Entitlement to Cash Refund of Accumulated and Unutilized Cenvat Credit of Education Cess and Secondary and Higher Education Cess:The appellant argued that the Revenue denied the refund on the grounds that Cenvat credit of Education Cess and Secondary and Higher Education Cess is not admissible. The appellant relied on multiple high court decisions which supported the admissibility of such refunds under Rule 5 of the Cenvat Credit Rules, 2004. The Tribunal confirmed that Rule 3 of the Cenvat Credit Rules explicitly allows Cenvat credit for Education Cess and Secondary and Higher Education Cess. Consequently, the appellant is legally entitled to Cenvat credit for these cesses, and the refund cannot be denied on this ground.2. Whether the Refund Claim is Time-Barred:The appellant also contended that the refund claim was not time-barred, supported by various high court judgments. The Tribunal cited several cases, including:(a) Slovak India Trading Company Pvt. Limited vs. CCE Bangalore: The Karnataka High Court ruled that refund claims should not be rejected when an assessee exits the Modvat scheme or closes the company. The Supreme Court upheld this decision.(b) Shalu Synthetics Private Limited vs. CC & SD Vapi: The Tribunal, following the Karnataka High Court's decision in Slovak India Trading, held that refund claims for accumulated unutilized credit are not subject to limitation.(c) Luvkush Textiles vs. CCE Jaipur: The Rajasthan High Court ruled that the refund of accumulated credit is permissible in cash, especially when the manufacturing unit is closed.(d) Welcure Drugs & Pharmaceuticals Limited vs. CCE Jaipur: The Rajasthan High Court reiterated that Rule 5 does not prohibit cash refunds for accumulated Cenvat credit.The Tribunal concluded that the issue is no longer res-integra, affirming that the appellant is entitled to a cash refund of the accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess. The impugned order was set aside, and the appeal was allowed with consequential relief.Conclusion:The Tribunal ruled in favor of the appellant on both issues. It held that the appellant is entitled to a cash refund of the accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess, and that the refund claim is not time-barred. The appeal was allowed with consequential relief.