Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1256

Refund of Unutilised Cenvat Credit on closure of factory - Allowability of

Case: STEEL STRIPS V/s COMMISSIONER OF C. EX., LUDHIANA
 
Citation: 2011(269) E. L.T. 257 (Tri-LB)
 
Issue:- Whether refund of unutilised Cenvat Credit will be admissible on closure of unit under Rule 5 of CCR’04?
           
Brief facts:- The assessee had paid the duty through PLA account on account of coercion by the Department or otherwise, inspite of having sufficient balance in the modvat/Cenvat credit, on the factory or unit becoming inoperative and there being no likelihood of restarting the production, assessee filed for refund of the credit amount under the provisions of law in force
     
Appellant’s Contention:- Appellant submitted that
 
1. Rule 5 permits refund and there is no bar in law to grant refund of unutilized Modvat credit when the inputs have undergone manufacture. Whatever may be the reason of accumula­tion of input credit that remaining unutilized is to be refunded. The precedence of Tribunal in respect of refund of unutilized credit has been upheld by the Apex Court. That has entitled the assessee to press their refund claim. For such sub-mission reliance was placed on the decision in the case of Hutch Associated Cement Companies Ltd., Jabalpur v. Collector of Central Excise, Indore - 1987 (27) E.L.T. 764 (Tribunal).
 
2. It was also argued that when the Revenue did not appeal against the decisions in Eicher Tractor - 2002 (147) E.L.T. 457, Shree Prakash Textile . 2004 (169) E.L.T. 162, Babu Textile Industries - 2003 (158) E.L.T. 215, and Arcoy Industries - 2004 (170) E.L.T. 507 (Ref. para 13 of referral order), correctness of judgment of the Slovak India Trading Co. Pvt. Ltd. - 2006 (201) E.L.T. 559 (Kar.) cannot be ques­tioned by Revenue before Larger Bench. To submit so, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Berger Paints India Ltd. v. Commissioner of Income Tax, Calcutta, reported in 2004 (165) E.L.T. 488 (S.C.).
 
3. It was further submitted that there is no bar to give cash refund when an assessee ceases to exist and manufacturing operation comes to an end and there exists no Modvat account into which refund can be credited following the decision in CC&CE, Bhopal v. Bombay Burmah Trading Corpon. Ltd., reported in 2005 (190) E.L.T. 40 (Tri.- Del.). Reliance was also placed on the decision of Rama Industries Ltd. v. CCL, Chandigarh reported in 2009-TIOL-100-HC-P&H-CX to submit that when Hon'ble High Court of Kamataka has decided to grant refund under Rule 5 of the Cenvat Credit Rules, 2002 and that ends litigation of Reve­nue.
 
Respondent’s Contention:- Revenue contended that adjustment of input credit was permitted against duty liability on manufactured goods by process of law. When law grants ad­justment that should also govern refund, if any to be made, when input credit remained unutilized. There was no compulsion to make payment of excise duty through the PLA if there is eligibility to Modvat credit adjustment. Plea of refund does not arise without sanction of law without mandate and refund is granted by an order for that purpose. The Larger Bench decision relied upon by Assessee is of no consequence since that decision has failed to consider scheme of Modvat credit and has exceeded its advisory and consultative jurisdiction exercising powers of an equity Court not vested with Tribunal.
 
2. Revenue's further argument was that courts cannot compel forma lion of policy decision to suit to a particular manufacturer or claim and accumu­lated credits in the Modvat account is not allowable to be refunded in cash fol­lowing the decision of the Apex Court in Kusum Products Ltd. v. UOI - 2003 (157) E.L.T. 258. Plea of the assessees that they are entitled to refund of the credit un­der Rule 5 of Cenvat Credit Rules, 2002 is baseless in absence of the mandate of the 1994 Rules.

3. The 1994 Rule had provision for refund of the input credit subject to such safeguard, conditions and limitations as specified by Central Government by notification where the input credit remained unutilized due to final product being cleared for export under bond or letter of undertaking as the case may be, or used in the intermediate product cleared for export and for any reason ad­justment of input credit is not possible. But the assessees in the batch of reference had no such case. The provisions of Rule 5 of Cenvat Credit Rules, 2002 cannot be equated with the erstwhile Modvat procedure.
 
4. Learned D.R. relying on the judgment of the Apex Court in the case of Eicher Motors Ltd. v. UO1-1999 (106) E.L.T. 3 (S.C.) submitted that Apex Court has not permitted any claim to be construed as vested right which did not arise under the law. Unless a right is conferred by law to get refund of the nature claimed in the present reference, that should be extinct.
 
5. Learned DRrelied on the judgment of Nahar Industries Ltd..'. Union of India - 2009 (235) E.L.T. 22 (P & H) to submit that an assessee is not entitled to refund of duty in cash regardless of mode of payment of the same unless author­ized by law for such refund.
 
Reasoning of Judgement:- It was held that Modvat law has codified procedure for adjustment of duty liability against Modvat Account. That is required to be carried out in accordance with law and unadjusted amount is not expressly permitted to be refunded. In ab­sence of express provision to grant refund, that is difficult to entertain except in the case of export. There cannot be presumption that in the absence of debarment to make refund in other cases that is permissible Law has only recognized the event of export of goods for refund of Modvat credit as has been rightly pleaded by Revenue and present reference is neither the case of "otherwise due" of the refund nor the case of exported goods. Similarly absence of express grant in statute does not imply ipso facto entitlement to refund.
 
Decision:- The question referred in referral order is answered as per above and in negative. Registry is required to place the respective cases before appropriate Bench to decide the Appeals.
 
Comment:- It is very interesting to note that in CCR, 2004, there is no provision of refund of unutilised cenvat credit on closure of factory, however in many cases assessee has been granted refund on closure of factory but that depends on circumstances and facts of each case. In the present case, Tribunal has taken a strict view.

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com