2010 (3) TMI 584 - AT - Central Excise

Tribunal grants relief to tractor manufacturers in refund claim dispute, citing Cenvat credit rules and exemption notification.

Mahindra & Mahindra Ltd. Versus Commissioner of Central Excise, Mangalore

The Tribunal allowed the appeal, granting relief to the appellants, who were manufacturers of tractors seeking a refund claim based on Cenvat credit rules ... Cenvat credit - appellants reversed the amount of Cenvat credit attributable to the inputs lying in stock on the date of exemption of the goods along with the inputs used in the work-in-process and finished goods – filed refund claim of the amount which was taken as credit on input which were used by assessee in final products which were cleared in payment of duty – prior to such finished goods being exempted – refund denied - has chosen to allow the appeal in terms of the impugned order. It is in these circumstances, the Revenue is before us raising the above referred questions of law – Held that: - orders of lower authorities are incorrect, inconsistent with the settled law and liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any. Issues:- Denial of refund claim based on Cenvat credit rules and exemption notificationAnalysis:The case involved an appeal against the denial of a refund claim by the lower authorities. The appellants, manufacturers of tractors falling under Chapter 87, had a balance of Cenvat credit on the date when the goods became exempt from duty. The dispute arose regarding the eligibility for a refund of this balance. The appellants argued that they should be entitled to the refund as they were forced to file the claim due to their inability to utilize the Cenvat balance and the closure of their factory. They relied on precedents where refunds were allowed in similar situations. The Revenue, on the other hand, argued against the refund, citing previous Tribunal decisions and the surrender of the Central Excise Registration certificate by the appellants.The Tribunal analyzed the relevant Cenvat Credit Rules and the specific circumstances of the case. It was noted that the credit of duty paid on inputs was availed by the appellants on supplementary invoices and utilized in the manufacture of final products cleared on payment of duty. The Tribunal observed that the denial of the refund claim by the lower authorities was based on rules 3, 5, and 6 of the Cenvat Credit Rules, 2002. However, the Tribunal disagreed with this interpretation, highlighting that the appellants were eligible to avail Cenvat credit on duty paid goods before the exemption date. The Tribunal also distinguished the applicability of rule 6 in this case, as the appellants had followed the necessary procedures regarding Cenvat credit reversal.Moreover, the Tribunal referenced a previous judgment by the Hon'ble High Court of Karnataka in a similar case, where the court allowed a refund claim in the context of a company closure and exiting the Modvat Scheme. The Tribunal found that the lower authorities' decision was incorrect, inconsistent with established law, and set it aside. Ultimately, the appeal was allowed, granting relief to the appellants.