By TIOL News Service

MUMBAI, NOV 10, 2013: THIS is a Revenue appeal against an Order-in-Appeal passed by the Commissioner of Customs & Central Excise (Appeals), Goa.

The respondent-assessee had a monstrous balance of unutilized CENVAT credit of Rs.91,23,836/- in their books of accounts, when the company declared closure on 01/09/2011 due to adverse market condition.

Seeking to cash-in this unutilized CENVAT credit, the assessee filed a refund claim citing Rule 5 of CENVAT Credit Rules, 2004 on the ground that they were unable to utilize the credit on account of closure of their factory.

The adjudicating authority on the 31 st January, 2013 rejected the claim on the ground that there is no provision in law to allow such refund in cash on the ground that the factory is closed. While passing this order, he relied on the Larger Bench decision in the case of Steel Strips vs. CCE, Ludhiana - (2011-TIOL-656-CESTAT-DEL-LB).

The lower appellate authority set aside this rejection order on 29/05/2013 and allowed the appeal by placing reliance on the decision of the Karnataka High Court in the case of UOI vs. Slovak India Trading Co. Pvt. Ltd. - (2006-TIOL-469-HC-KAR-CX).

Now, Revenue is aggrieved and is before the CESTAT.

It is submitted that Rule 5 of the CCR, 2004 permits refund of CENVAT credit in cash only in a situation where any input or input services are used in the manufacture of final products, which is cleared for export under bond or under letter of undertaking, as the case may be, or used in the intermediate product cleared for export or used in providing output service, which is exported; that in the present case, it is not the case of respondent that the credit, which is lying unutilized in their accounts pertains to the goods/services exported or to inputs used in the manufacture of goods which are exported and therefore, the provisions of Rule 5 are not attracted at all. Support is drawn from the LB decision in the case of Steel Strips cited by the adjudicating authority.

The respondent assessee submitted that the decision of the Karnataka High Court supports their stand.

To a query from the Bench as to whether the benefit of refund in pursuance to the O-in-A has been given, the respondent replied in the negative.

The Bench, therefore, observed -

"5. Considering the submissions made by both the sides, inasmuch as the refund has not been sanctioned yet, we are of the considered view at the interim stage the status quo should be maintained till the final disposal of the appeal. Therefore, stay is granted against the impugned order."

In passing: Also see Jain Vanguard Polybutylene Ltd. - (2009-TIOL-1528-CESTAT-MUM), Birla Corporation - (2011-TIOL-1110-CESTAT-MUM), Om Enterprises - (2008-TIOL-1351-CESTAT-MUM) & Gauri Plasticulture - (2006-TIOL-1121-CESTAT-MUM-LB).

(See 2013-TIOL-1671-CESTAT-MUM)