Accumulation of Cenvat Credit

[Samir Banerjee]

Dear Sir

A manufacturing unit say 'A' procuring inputs on payment of Tariff Rate of Excise Duty let us assume 12%

but while clearing their finished goods the rate of duty is less than the rate of duty paid on capital goods and inputs, with the result, the huge amount of Cenvat credit being accumulated and adding cost to the company. Please advise in this scenario is there any provision in Cenvat Credit refund rule to get the refund of accumulated Cenvat Credit. If yes, under which Notification and what would be the procedure to get the refund?

[Rajagopalan Ranganathan]

Sir,

Unless your quantum of exports exceed your quantum of Home clearance on payment of duty you cannot claim refund of accumulated cenvat credit. But if your quantum of exports exceed your quantum of home clearance then you can claim refund of unutilized credit under rule 5 of CENVAT Credit Rules, 2004. There is no other provision under Central Excise Act, 1944 or the rules made thereunder.

AI Summary

Refund of accumulated Cenvat Credit available only when export clearances exceed home clearances, claimable under Cenvat Credit Rules. A refund of unutilized Cenvat credit is available only if the quantum of export clearances exceeds the quantum of home clearances on which duty was paid; otherwise accumulated Cenvat credit is not refundable, and the remedy is under the Cenvat Credit Rules, 2004.