2009 (12) TMI 420 - AT - Central Excise

Tribunal Upholds Cash Refund Decision, Allows Interest Beyond 3 Months

The Tribunal dismissed the Revenue's appeals, upholding the Commissioner (Appeals)'s decision to grant the refund in cash and to allow interest for the ... Appeal to appellate Tribunal- Refund- The Assistant Commissioner vide orders-in-original sanctioned the refund of these amounts but ordered payment through recredit to the cenvat credit account. In other words both the refunds were sanctioned by recredit to the cenvat credit amount of the respondent, while the respondent had pleaded for refund in cash. The Assistant Commissioner had ordered the refunds through recredited in the cenvat account on the ground that both the amounts of pre-deposit have been paid by way of debit in the cenvat credit account and not through PLA. The respondent filed appeals before the Commissioner (Appeals) and in the appeals also prayed for interest on the refund amount for the period of delay. It was pleaded before CCE (Appeals) that when amounts have been paid through cenvat credit, the unit was functional, but by the time these amounts became refundable, the unit has closed down and had shifted to Baddi, where the unit avails of hill area exemption and cannot avail cenvat credit and that the unit, therefore; was not in a position to utilize to utilize any cenvat credit. Held that- as assessee had shifted their unit to place where they were availing hill area exemption and were not in position to avail credit. Refund of pre-deposit amount upheld. Since assessee had started to avail exemption at time of refund and were not able to utilize Cenvat Credit, such refund was meaningless for them. O grant of refund in cash, assessee had entitled to interest for delay in its grant. Issues Involved:1. Competency of the single bench to hear the matter involving a total duty refund of Rs. 11 lakhs.2. Whether the refund of pre-deposit should be made in cash or through recredit in the cenvat credit account.3. Entitlement to interest on the refund amount for the period of delay beyond three months from the date of filing the refund application.Detailed Analysis:1. Competency of the Single Bench:The learned DR raised a preliminary objection that the matter must be heard by a Division Bench since the total duty refund involved is Rs. 11 lakhs. However, it was argued by the respondent's counsel that since there were two separate appeals disposed of by the CCE (Appeals) by a common order, and each appeal involved an amount within the jurisdiction of a single bench, a single bench is competent to hear the matter. The Tribunal agreed with the respondent's counsel, stating that the appeal should be treated as two separate appeals involving amounts of Rs. 10 lakhs and Rs. 1 lakh, respectively. Therefore, the single bench is competent to hear the matter.2. Refund of Pre-deposit:The appellant had paid pre-deposits of Rs. 1 lakh and Rs. 10 lakhs by debiting their cenvat credit account. When the Tribunal decided in favor of the respondent, these amounts became refundable. The Assistant Commissioner sanctioned the refunds but ordered payment through recredit to the cenvat credit account. The respondent argued that since their unit had shifted to Baddi and was availing hill area exemption, they could not utilize the cenvat credit and thus requested a cash refund. The Commissioner (Appeals) allowed the cash refund, citing the Tribunal's judgment in similar cases where the unit was either closed or not in a position to utilize the cenvat credit. The Tribunal upheld this decision, stating that since the respondent's unit was availing full duty exemption and could not utilize the cenvat credit, the refund should be given in cash.3. Interest on Refund Amount:The Commissioner (Appeals) also ordered interest on the refund amount for the period of delay beyond three months from the date of filing the refund application, following the Supreme Court's judgment in the case of CCE, Hyderabad vs. ITC Limited. The learned DR argued that the interest should only be payable from the date of the Assistant Commissioner's order sanctioning the refund. However, the Tribunal held that since the respondent could not utilize the cenvat credit, the refund could be treated as sanctioned only when paid in cash. Therefore, the interest for the period of delay beyond three months from the date of filing the refund application was correctly ordered by the Commissioner (Appeals).Conclusion:The Tribunal dismissed the Revenue's appeals, upholding the Commissioner (Appeals)'s decision to grant the refund in cash and to allow interest for the period of delay beyond three months from the date of filing the refund application. The single bench was deemed competent to hear the matter, and the refund in cash was justified due to the respondent's inability to utilize the cenvat credit.