Refund of Unutilised Cenvat Credit

PJ/Case Laws/2011-12/1202

Refund of Unutilised Cenvat Credit - admissibilty of

Case:-STI INDIA LTD. v/s COMMISSIONER OF CUS. & C. EX., INDORE

Citation:-2009(236) E.L.T. 248 (M.P.)

Issue:- Refund of Unutilised cenvat credit – Whether can be denied on the ground that claim was not filed strictly within prescribed time period specified in clause 6 of Appendix read with section 11B of Central Excise Act, 1944?

Brief Facts: -The appellant was a limited company engaged in the business of cotton yarn, cotton fabric and cotton polyester yarn. They availed Modvat credit of the duty paid inputs during the period October to December 1998. During relevant time the appellant were also availing the benefit under EPCG scheme by exporting their goods in order to fulfill their export obligation. It was due to the reason that the appellant could not utilize the Modvat credit towards payment of duty. Thereafter the appellant filed the refund claim before the Assistant Commissioner under clause 6 of appendix to notification issued under Rule 57F which provided for refund of Modvat credit allowed on inputs and used in goods exported under bond. Appellant claimed the refund of credit which was lying in their RG-23A Part II. The refund claim was rejected by the Assistant Commissioner as being barred by limitation. In appeal, the Commissioner (Appeal) dismissed the appeal and upheld the order of -Assistant Commissioner.

Hence, appellant was before the Tribunal. The Tribunal also upheld the orders of the lower Authorities and therefore, appellant is before the High Court.

Reasoning of Judgment:-The High Court held that merely because the refund application was not filed within 6 months before expiry of period specified in clause6 of Appendix read with section 11B but was filed late by 27 days could not have been made the sole ground for the rejection of application as barred by limitation. In fact, the claim in issue did not fall strictly within the four corners of Section 11B but it essentially fell within the four corners of clause 6 of Appendix to notification issued under Rule 57F. Further what was required to be seen by the authorities was whether appellant had submitted along with application all necessary proof regarding exportation of goods and relevant extracts of form RG 23-A or deemed credit register maintained in respect of textile fabrics in original a the case may be as provided in clause 6 of Appendix to notification issued under Rule 57F. Once the appellant was able to satisfy these requirements to the satisfaction of authority concern then they were entitled to claim the refund of duty paid on inputs.

Hence the refund claim cannot be rejected only on the ground that the application was not filed within 6 months before expiry of period specified in said clause.

Decision:The appeal was allowed.

Comment:- We have across many case laws where the credit is disallowed when the refund is disallowed when the refund is filed beyond the time limit of filing of refund claim. But in this decision the Hon’ble MP High Court has held that it cannot be disallowed on the sole reason that it has not been filed in time.

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