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PJ/CASE-LAW/2015-16/2745

Refund of accumulated credit to exporter is admissible in cash.

Case:-STANDARD BATTERIES LTD VERSUSCOMMISSIONER OF C. EX., MUMBAI-III

Citation:- 2014 (307) E.L.T. 601 (Tri. - Mumbai)

Brief Facts:-Brief facts of the case are that the appellant is the manufacturer of batteries which they were exporting outside India. In one of the clearance, the foreign buyer has cancelled the order and the same was supplied to the Indian Navy. As supply to the Indian Navy is exempted from excise dutytherefore, before clearing the goods, the appellant reversed the input credit availed pertaining to the said clearance. The Revenue was of the view that as the appellant was not maintaining a separate account for their exempted as well as dutiable final products therefore, they are required to reverse 8% of the value of the exempted goods. During the course of investigation, the appellant paid a sum of Rs. 2,00,000/- and Rs. 11,32,694.69/- through Cenvat credit account. Later on, the matter travelled up to this Tribunal and this Tribunal held that as the appellant has already reversed the input credit pertaining to the clearance to the Indian Navy therefore, they are not required to pay 8% of the value of the exempted goods. In these circumstances, a refund of Rs. 11,32,694.69 was to be given to the appellant. Accordingly, the appellant filed a refund claim. The adjudicating authority has sanctioned a sum of Rs. 2,00,000/- in cash and the remaining amount he held that the said amount will be credited in Cenvat account. Aggrieved by the same, the appellant is in appeal before this Tribunal.
 
Appelants Contention:-The learned Counsel for the appellant submits that as the factory of the appellant is closed therefore, the appellant is not in a position to maintain the CENVAT account. Hence the refund amount ought to have been paid in cash as per the Circular No. 220/54/1996-CX, dated 4-6-1996. Cenvat credit is accumulated in their account due to export of the goods and the same could not be utilized by the appellant as their factory is closed.
 
Respondents Contention:-On the other hand, the learned AR submits that as they have reversed the amount from their CENVAT credit account therefore, the amount can be refunded to the CENVAT credit
 
Reasoning of Judgement:-Considered the submissions and perused the records.
Vide Circular No. 220/54/1996-C.E., dated 4-6-1996 the issue was examined and decided as under :-
“2. The matter has been examined by the Board. Cash refund of the unutilized Modvat credit is an incentive given to manufacturers and exporters and non-grant of such claim will affect the competitiveness of the Indian industry in the International market. Accordingly I am directed to say that all such refund claims filed under the provisions of Rule 57F(4) of the Central Excise Rules, 1944 should be decided expeditiously, wherever the manufacturer is not able to utilize the credit of duty, allowed under Rule 57A against the goods exported during the quarter/month to which the claim relates.”
It is not in dispute that theappellant is an exporter and the said CENVAT credit is accumulated in the CENVAT credit account due to the exports only. It is also a fact on record that the factory is closed therefore, the appellant is not able to utilize the amount lying in the CENVAT credit account. Accordingly, as per the Circular cited above, the appellant is entitled to take the amount in cash. Therefore, tribunal directed the concerned authorities to issue the refund in cash to the appellant. The appeal is disposed of in the above terms.
 
Decision:- Appeal disposed off.

Comment:- The crux of the case is that the refund of accumulated cenvat credit on account of exports is admissible to the exporter in cash and this is also strengthened by Circular No. 220/54/1996-CX, dt 4-6-1996.

Prepared By:- Neelam Jain
 
 
 

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