CX - Unutilized credit on account of closure of factory should not be denied on ground that procedural requirements of Rule 5 of CCR, 2004 not met: HC
By TIOL News Service
CHENNAI, DEC 26, 2018: ORIGINAL authority disallowed the refund claim of Rs.40,51,961/- filed under rule 5 of the CCR, 2004 on the ground that the claim had been filed after a lapse of one year after the date on which the goods have been exported.
The Commissioner (Appeals) upheld the order.
The Madras High Court while holding that the writ petition against this order is not maintainable granted liberty to the petitioner to approach the Tribunal.
Before the Tribunal, the appellant submitted that the refund claim was, in fact, filed only for accumulated credit owing to closure of the factory. However, as there was no procedure for claiming of such refund under Cenvat Credit Rules, 2004 or Finance Act, 1994, they filed the claim under Rule 5 of the Rules and Notification No. 27/2012-CE (NT).
The appellant drew attention to the following chart -
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Date/Period
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Event
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July 2011 to September 2011
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Export of finished goods and Inputs
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01.06.2013
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Date of reversal of credit
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01.07.2013
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Date of closure of factory
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18.07.2013
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Date of filing Application for refund.
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The CESTAT considered the submissions and by placing reliance on the decision in UOI Vs Slovak India Trading Co. P. Ltd. - 2006-TIOL-469-HC-KAR-CX as confirmed by the apex court observed -
"…I am of the considered opinion that since unutilized credit lying in the books of account on account of closure of factory should not be denied only on account of that they did not meet other procedural requirements of Rule 5 of the Rules read with Notification No.27/2012, The refund is therefore very much admissible. The matter is, however, remanded back to the original authority only for the limited purpose of ascertaining the correct amount of eligible accumulated credit that remained unutilized on account of such closure."
The appeal was allowed by way of remand.
We reported this case as - 2017-TIOL-1090-CESTAT-MAD .
Aggrieved, Revenue has filed an appeal before the Madras High Court.
Incidentally, the counsel for the Revenue informed that he has been given instructions by the Department to withdraw this appeal as not pressed on account of the low tax effect. [ Instruction dated 11 July 2018 refers.]
The respondent assessee, therefore, requested that a direction be issued to the appellant Revenue to implement the order passed by the Tribunal.
The Counsel for the Revenue argued that issuance of any such consequential directions would send a wrong precedent.
The High Court observed -
"…In normal circumstances, we would have even accepted the submission of the learned Standing Counsel appearing for the appellant but what prompts us to issue certain directions in the instant case is on account of the peculiar facts. This is so because, the assessee has admittedly closed down its activities in Puducherry and the date of closure as noted by the Tribunal is 01.07.2013 and they filed an application for refund on 18.07.2013. Thus, on account of closure of the unit as well as on account of the implementation of the General Sales Tax Act, we feel that in the instant case, an observation is required to be made while dismissing the appeal so that the appellant would be in a position to take the matter forward and implement the directions of the Tribunal."
The appeal was dismissed on the ground of low tax effect and the substantial questions of law were left open.
Revenue was directed to implement the direction issued by the Tribunal.
(See 2018-TIOL-2682-HC-MAD-CX)
