2005 (8) TMI 273 - AT - Central Excise

Tribunal allows refund claim of Rs. 4,15,057 for unutilized Cenvat credit upon factory closure

The Tribunal overturned the Commissioner's decision to reject a refund claim of Rs. 4,15,057/- for unutilized Cenvat credit upon factory closure. The ... Refund of unutilized Cenvat credit on closure of unit - entitlement to cash refund on exit from Modvat/Cenvat scheme - absence of provision under Rule 5 of the Cenvat Rules for cash refundRefund of unutilized Cenvat credit on closure of unit - entitlement to cash refund on exit from Modvat/Cenvat scheme - The refund claim in respect of unutilized Cenvat credit on closure of the factory is eligible and is to be granted in cash when the assessee exits the Modvat/Cenvat scheme or the unit is closed. - HELD THAT: - The Tribunal noted consistent earlier decisions holding that when an assessee goes out of the Modvat/Cenvat scheme or a unit is closed the unutilized cenvat credit is refundable in cash. The Commissioner (Appeals) had rejected the refund on the ground that Rule 5 of the Cenvat Rules does not provide for cash refund; the Departmental Representative argued that a statutory provision was necessary for grant of refund. Having regard to the Tribunal's consistent precedents, the impugned order rejecting the refund claim was set aside and the claim held to be admissible for cash refund. The reasoning follows the line of earlier Tribunal decisions treating exit/closure as entitling the assessee to cash refund of unutilized credit.Impugned order set aside; appeal allowed and refund claim to be granted in cash with consequential relief, if any.Final Conclusion: The appellate order rejecting the refund claim is set aside; the appellant is entitled to cash refund of the unutilized Cenvat credit on closure/exit from the scheme and the appeal is allowed with consequential relief, if any. Issues involved: Challenge to rejection of refund claim u/s Rule 5 of Cenvat Rules for unutilized credit upon factory closure.Summary:The appellant contested the Commissioner's order rejecting a refund claim of Rs. 4,15,057/- related to unutilized Cenvat credit upon factory closure. The Commissioner held that Rule 5 of the Cenvat Rules does not allow cash refunds. The appellant argued that the rejection grounds were not communicated in the show cause notice, citing precedents where refunds were granted in cash upon exiting the Modvat scheme or factory closure. The DR opposed, stating a legal provision is necessary for such refunds. After considering both arguments, the Tribunal noted consistent rulings that cash refunds are permissible when leaving the Modvat scheme or closing the unit. Consequently, the impugned order was overturned, and the appeal was allowed with any necessary relief.(Pronounced and dictated in the court)