Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2852

Whether the company can claim refund of accumulated Cenvat credit on winding up?

Case:-C.C., C. E. & S.T., HYDERABAD-IV VERSUSAPEX DRUGS & INTERMEDIATES LTD.

Citation:- 2015 (322) E.L.T. 834 (A.P.)

Brief Facts:-This appeal by the Revenue under Section 35G of the Customs Act, 1962 is directed against a common order dated 13-8-2010 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Bangalore rejecting the Revenue’s appeal against the Order-in-Appeal dated 30-10-2008 passed by the Commissioner (Appeals), Hyderabad. This appeal pertains to the order of the CESTAT in Appeal No. 1163 of 2010 [2014 (314) E.L.T. 729 (Tri.-Bang.)].The respondent is a manufacturer of bulk drugs and had operated under the Cenvat scheme, used to export finished goods and claimed refund of Cenvat credit accumulated on account of such exports in terms of Rule 5 of the Cenvat Credit Rules, 2004 (for short ‘the Rules’). The assessee wound up their operations and surrendered its registration certificate on 7-8-2007. Refund claims filed in respect of four quarters under Rule 5 of the Rules were allowed by the Original Authority. Where against the Revenue filed appeals before the Commissioner (Appeals). The said appeals were dismissed. There against appeals were filed before the CESTAT. While dismissing the appeals, the Tribunal relied upon the judgment of the Karnataka High Court in Union of India v. Slovak India Trading Co. Pvt. Ltd. - 2006 (201) E.L.T. 559, wherein in a substantially similar fact situation i.e., where the company wound up its operations and claimed refund of the accumulated Cenvat credit, the Karnataka High Court, interpreting Rule 5 of the Rules held that Cenvat credit is permissible. Against this judgment of the Karnataka High Court, the matter was carried in appeal to the Supreme Court. In Union of India v. Slovak India Trading Co. Pvt. Ltd. - 2008 (223) E.L.T. A170 (S.C.), the Supreme Court dismissed the SLP after recording that the learned Additional Solicitor General for India had fairly conceded that the several decisions of the Tribunal relied upon for granting relief to the assessee in terms of refund of Cenvat credit were not appealed against the Union and thereby implying that the Union could not fairly pursue litigation against the Slovak India Trading Co. Pvt. Ltd. either.

Appellants Contention-The learned Standing Counsel for Central Excise, Sri A. Rajashekar Reddy places reliance on the decision of a Larger Bench of the Tribunal in Gauri Plasticulture (P) Ltd. v. Commissioner of Central Excise, Indore -2006 (202) E.L.T. 199 (Tri.-LB). It requires to be noticed para 8 of this order while observing that “wherever the assessee was unable to utilize the credit on account of objection raised by the Department or actions taken by them by way of initiation of proceedings or paid duty out of Modvat account at the Department’s insistence, and for that reason he had to pay duty in cash or out of the PLA, they would be entitled to refund of that credit in cash, on the dispute being ultimately settled in favour of the assessee”. The Larger Bench of the Tribunal clearly observed “if an assessee is not able to use the credit on account of any reasons, whatsoever (which may be closure of his factory or final products being exempted etc.) the refund becomes admissible in cash or by way of credit entry in PLA to the extent duty paid in cash or out of PLA during the relevant period”.
Rule 5 of the Cenvat Credit Rules, 2002 reads :
“Rule 5. Refund of Cenvat Credit.- When any inputs are used in the final products which are cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export, the Cenvat credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification.”
 
Respondents Contention:- None appeared for the respondents.

Reasoning Of Judgement:-On a true and fair construction of the provision as well, the Rule entitles the manufacturer to refund of the Cenvat credit where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification. No notification of the Central Government setting out safeguards, conditions and limitations for the refund, in case of closure of the unit has been placed on record either before the Appellate Authority, the further Appellate Authority, the Tribunal or even before High Court. In the aforesaid circumstances, no substantial question of law arises for consideration in this appeal and it is accordingly dismissed at the stage of admission. No costs.

Decision:- Appeal dismissed.

Comment:-The analogy in the case is that if an assessee is not able to use the credit on account of any reasons, which may be closure of his factory or final products being exempted etc. then according to Rule 5 of Cenvat Credit Rules 2004,   the refund becomes admissible in cash or by way of credit entry in PLA to the assessee.
 
Prepared By:-Neelam Jain
 

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