TaxTMI 
TaxTMI 
2022 (3) TMI 325
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....ly legal. 2. The essential facts have been recorded in the previous order of February 15, 2022, though the parties were left free to urge all grounds. 3. The appellant-assessee procured an Arc Furnace as capital goods for the purpose of its manufacturing unit that produces ferro silicate components which attract excise duty. However, by reason of the location of the manufacturing unit, the assessee is entitled to refund of the excise duty to the extent paid. The appellant was also entitled to obtain Cenvat credit for acquisition of capital goods used in its process of manufacture. However, in terms of Rule 3(5) of the Cenvat Credit Rules, 2004, as such Rule stood at the relevant time, when any capital goods had been acquired and Cenva....
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....pect into account. At the same time to ensure that the amount to be refunded under the Rule was rational and not arbitrary or oppressive, the Rule could be read with reference to the expression "as such". That would imply that if the capital goods acquired were in the same state as at the time of acquisition, a complete refund of the Cenvat credit would have to be made. As a corollary, it would follow that if the capital goods were not in the state in which it had been acquired - upon such capital goods being put to use - the entirety of the Cenvat credit may not have to be refunded. The Rule, however, made no express distinction as to the quantum of refund of Cenvat credit that had to be made for no use or for little use or for exhausti....
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.... claims that the Assistant Commissioner, in his mistaken belief that the money that had been paid and indicated in the return was in connection with the duty on the manufactured goods of the assessee, refunded back the Cenvat credit obtained in respect of the Arc Furnace. A few months down the line, the alleged mistake was noticed and a show-cause notice was issued to the assessee as to why the amount should not be refunded by the assessee. For such purpose, Section 11A of the Central Excise Act, 1944 was pressed into service to demand the refund apparently erroneously made. 9. To complete the narration, the refund was extracted and the assessee's entreaties right up to the Tribunal fell on deaf ears. It is the order of the Tribunal upho....
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.... change that was effected by way of the subsequent amendment to Section 11A of the Act was in the introduction of the expansive expression "for any reason". 12. The assessee contends that since the expression "for any reason" did not find any place in Section 11A of the Act that ought to have been applied to the present case, it is evident that the Tribunal took irrelevant considerations into account and the decision-making process itself was awry. 13. The second principal ground pressed by the assessee is that notwithstanding the Rule 3(5) having been amended in the year 2007 and the demand for refund of the Cenvat credit on account of capital goods having been raised on the assessee earlier, the Tribunal at various places and some H....
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....capital goods or after long years of use thereof. The distinction was brought about and the remission, so to say, was provided in the amended Rule 3(5) of the said Rules in 2007. 15. On facts similar to the present case, the Madras High Court upheld the view taken by the Tribunal in interpreting the benefit conferred by the amendment to Rule 3(5) to have retrospective operation even if the demand for the refund of the Cenvat credit obtained for the capital goods had been raised prior to the amendment of 2007. 16. The third and the most important ground urged by the appellant is that in view of the exemption that the appellant is entitled to by reason of the location of its manufacturing facility, the assessee ought not to have been re....
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....ng excise duty on its manufactured products, is revenue neutral. There is considerable force in such contention that when a manufacturer is entitled to refund of the entire excise duty, the refund to the Department of any adjusted Cenvat credit availed of would again have to be refunded by the Department by virtue of the exemption to which the assessee is entitled to. 18. The third aspect - the most important ground - urged on behalf of the assessee goes to the root of the matter does not appear to have been considered by the Tribunal in the impugned judgment and order dated January 16, 2020. 19. The Department, fairly, accepts that the matter may require fresh consideration. Accordingly, the judgment and order of the Tribunal dated J....