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CX - Refund of duty in CENVAT credit - Since the Company is referred to BIFR, Petitioner's request to credit amount to Bank account to enable discharge of some loan is allowed: High Court

By TIOL News Service

HYDERABAD, JAN 28, 2017: THE petitioner challenged an order passed by the Deputy Commissioner of Central Excise, refusing to pay the refund as ordered by the Commissioner directly, but to credit the same in the CENVAT account.

By an order dated 04.11.2015, the Commissioner (Appeals) allowed the appeal of the petitioner for refund of a sum of Rs.17,55,947/- That order has attained finality.

But, when the petitioner actually sought the amount, the respondent passed an order in original, agreeing to allow the CENVAT credit to the extent of the refund ordered, but refusing to pay the refund by way of cash or credit. Aggrieved by the said order, the petitioner is before the High Court.

The grievance of the petitioner is that it has already become a sick Company and a reference to this effect has already been made to the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985. Therefore, the petitioner claimed that there is no point in having CENVAT credit for a sick Company. The petitioner actually wants the amount of refund to be paid to the State Bank of India, which is a secured creditor.

After hearing both sides, the High Court held:

+ A careful look at the order in appeal passed in favour of the petitioner directing refund, shows that this is a case where the petitioner paid excess duty, but did not pass on the incidence of such duty to any other person. Such a finding is recorded by the Commissioner (Appeals) and the said order has also attained finality. Therefore, this case,falls within Clause (e) under the proviso to sub-section (2) of Section 11B.

+ The petitioner is not asking the money to be paid into his account. He is only asking the money to be paid to the State Bank of India towards discharge of some loan. In such a case, the payment to the Bank would also act, probably as a recovery for the Bank.

+ Therefore, the Writ Petition is allowed, directing the respondents to pay the amount of refund directly to the no lien account bearing No. 30286184022 of the petitioner in State Bank of India, Stressed Assets Management Branch, Secunderabad Branch, towards discharge of any part of the liability of the petitioner.

(See 2017-TIOL-190-HC-AP-CX)


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