By TIOL News Service

NAINITAL, APR 10, 2014: THE appellant was entitled to CENVAT credit but the department prevented them from utilizing the same. It appears that this was because of certain notifications issued by the Government.

Ultimately, it was decided that those notifications do not stand in the way of utilizing these credits. By the time the same was decided, the goods manufactured and sold by the appellant became exempted from the levy of excise duty. Accordingly, question of adjusting such CENVAT credit with the excise duty payable by the appellant did not arise.

Appellant, therefore, approached the Department for refund of the amount of credit lying in their account but the adjudicating authority denied the claim. However, the Commissioner(A) passed an order in favour of the appellant and they finally got the refund. The department also agreed to pay the interest initially but later they backtracked.

When the matter reached the Tribunal, the CESTAT felt that it was not a refund of the duty as such, as the credit lying in the accounts of the appellant was not the duty used by the Department and, as such, no interest is payable thereon.

So, the appellant is before the Uttarakhand High Court.

It is submitted that the Tribunal has not taken into account the provisions of section 11BB of the CEA, 1944 and particularly the provisions of Section 11B (2) (c) of CEA, 1944 which reads - (c) Refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act;

The High Court observed -

"4. We are of the view, having considered the provisions of law quoted above, that there is a specific provision in the Act for refund of credit of duty paid on excisable goods used as inputs and while dealing with interest on refund in Section 11BB of the Act, no distinction has been made in between such credit and any other duty referred to in the first proviso to sub-section (2) of Section 11B of the Act."

Holding so, the High Court set aside the judgment of the Tribunal and remitted the matter to the Tribunal for de novo decision, except the conclusion of the Tribunal in the judgment impugned in these appeals to the effect that no interest on such refund is payable.

The appeals were disposed of accordingly.