2019 (2) TMI 685 – CESTAT CHENNAI – TMI – Refund of accumulated CENVAT Credit – surrender of service tax registration – export of services – Rule 5 of Cenvat Credit Rules, 2004 read with Section 11B of Central Excise Act, 1944 – Held that:- The term “Total turnover” used in the above formula includes the sum total value of all excisable goods cleared during the relevant period. It doesn’t restrict the inclusion of value of the excisable goods exported, per se. Sub-rule (2) deals with a situation where duty drawback is allowed and further lays down that in such a situation, credit could not be refunded. Therefore, it is clear from the above that Rule 5 facilitates the refund of Cenvat credit not merely of the excisable goods exported and therefore to say that Rule 5 provides for refund of un-utilized Cenvat only in the cases of export of service is incorrect.
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Accepting this interpretation of the Commissioner (Appeals) would lead to serious anomaly, which cannot be the intention o
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016, on 25.07.2017. On verification of the refund claim, it came to the notice of the department that the appellants are not eligible for the refund claim since, according to the Asst. Commissioner, as per Rule 5 of Cenvat Credit Rules, 2004 read with Section 11B of Central Excise Act, 1944, a refund of unutilized cenvat credit could be allowed only when the cenvat credit was related to services used for the export of services. A Show cause notice dated 21.11.2017 was thus issued proposing rejection of refund claim as they are not eligible for the refund of balance lying unutilized in their cenvat account at the time of closure of business. The appellant vide reply dated 03.01.2018 to the SCN replied that the refund claim was made because they had wound up their business and dissolved their partnership firm on 02.11.2016; had surrendered the service tax registration also on the same date; that they had also paid the service tax liability for the month of July, 2016 through cash as the
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Scheme and CCR, with a particular reference to Rule 5 of CCR, which provided only for refund in the case of excess credit remaining surplus on the only solitary account of export and not in any case of balance of cenvat credit lying unutilized and unusable consequent to closure of business. On appeal, the Commissioner (Appeals) upheld the order of the adjudicating authority. Hence, this appeal. 2. Ld. Counsel, Shri P. Ravindran, appeared for the assessee and submitted that such refund claim has been allowed by a catena of judicial pronouncements and such case laws on which reliance was placed were produced before both the lower authorities. The adjudicating authority had mis-construed the claim of the appellants as a claim for refund of the debit of tax made in cash whereas, the appellants had only claimed refund of unutilized cenvat credit lying in balance consequent to closure of their business. He submitted that both the authorities have failed to consider the dictum laid down in t
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h are cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export, the CENVAT credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification : Provided that no refund of credit shall be allowed if the manufacturer avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty. 4.2 Rule 5 of Cenvat Credit Rules, 2004 facilitates refund of credit, to be worked out in the manner provided in the formula prescribed, under sub-rule (
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with the Revenue; the appellant has surrendered its Service Tax Registration and they have also paid the service tax liability as on the last date of their business. The law cannot, therefore, lead to a situation where a bonafide tax payer s amount could be denied and withheld, for no fault of his. Further, in such a situation a bonafide assessee cannot be left remediless with his/its money in the form of credit struck with the Government. My view as above is also supported by the decision of the Hon ble High Court of Karnataka in the case of Slovak India Trading Co. Pvt. Ltd. (supra), which decision has been followed by various judicial fora across the nation. 5. Further, when Article 265 of our Constitution mandates that no tax be impaled/ collected without the authority of law, it is incumbent upon the Revenue to justify even retention, when there is bonafide payment/credit. In this case, there is no allegation or not even a whisper about unjust enrichment: after rejecting appellan
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