M/S. Laxmi Durga Textiles vs Cce, Hyderabad-Iv
- CitationAppeal No. 07/2009
Ratio decidendi
The rule this decision rests on
The CENVAT credit scheme permits credit of duty paid on inputs only for utilisation in payment of duty on the final product; where the final product becomes exempt, unutilised credit cannot be converted into cash absent any statutory provision for its refund. Where the CENVAT Credit Rules contain no provision for refund of unutilised credit, an assessee who opts for an exemption notification conditioned on non-availment of credit cannot claim that accumulated credit be paid out in cash; having opted for the exemption, the assessee must accept the consequences of that choice. A claim for refund of unutilised CENVAT credit lying in the assessee's records as on the date of opting for the exemption is time-barred when filed beyond the limitation period of two years from that date.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Appeal No. 07/2009 dated 28/01/2009 passed by CC, CE&ST(Appeals-II), Hyderabad]
For approval and signature:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3 Whether Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
M/s. Laxmi Durga Textiles Appellant(s)
Versus
CCE, Hyderabad-IV
Respondent(s)
Appearance:
, Advocate For the appellant
Shri Mohd. Yusuf, Addl. Commissioner(AR)
For the Revenue
Date of Hearing: 20/02/2015
Date of Decision:
CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER
Final Order No. / 2015
Per : ARCHANA WADHWA
As per the facts on record, the appellants are engaged in the manufacture of grey fabrics falling under chapter heading 54 of the Central Excise Tariff Act, 1985. During the relevant period, they were availing CENVAT credit of duty paid on yarn which was used in the manufacture of their final product, which attracted duty of excise. However vide Notification No.30/2004-CE dt. 09/07/2004, duty on the appellants final product was withdrawn subject to the condition that no CENVAT credit stand availed on the inputs used in the manufacture of the grey fabrics. The appellant opted for the said notification vide their letter dt. 12/07/2004 and subsequently vide their letter dt. 16/11/2004 requested for cancellation of their registration.
2. As at the time of opting for the said notification, the appellants were having CENVAT credit to the extent of Rs.23,88,301/-, they claimed the refund of the same, in cash, under the cover of their letter dt. 18/12/2006. The said claim of the appellant stands rejected by the authorities below on the ground that there is no provision of grant of refund of accumulated CENVAT credit in cash, except the provisions of Rule 5 which belongs to the case of export of the final product. The lower authorities also rejected the refund claim as barred by limitation having been filed after a gap of more than two years.
3. After hearing both the sides, I find that there is no dispute on the factual position. With the issuance of the Notification No.30/2004-CE dt. 09/07/2004, the appellant opted for availment of the said notification. One of the conditions of the notification was non-availment of CENVAT credit. As prior to opting for the said notification, the appellant was availing CENVAT credit of duty paid on the inputs and used in the manufacture of the final product which attracted duty of excise, they were having unutilised credit to the extent of Rs.23.88 lakhs.
As per the CENVAT Credit Rules, the credit of duty paid on the inputs used in the manufacture of dutiable excisable goods is allowed to be used for payment of duty on the final product. When the final product became exempt, such utilisation of any unutilised credit, is not possible. However, I agree with the authorities below that there is no provision in the CENVAT Credit Rules for refund of such unutilised credit. The lower authorities have rightly observed that if the assessee intended to avail the credit, they should not have opted for notification in question and they were within their rights to continue payment of duty on their final product by utilising the said credit. In the absence of any provision for refund of such unutilised credit and in view of the clear scheme of the CENVAT credit being allowed only for utilisation for payment on the duty of final product, I find no merits in the contention of the appellant that such credit should be allowed to them by way of cash.
4. Apart from above, I also find that the refund claim is clearly barred by limitation. Vide their application dt. 18/12/2006, the appellant is seeking refund of CENVAT credit which was in their records, lying unutilised as on 09/07/2004, when the notification in question was issued and the appellant opted for the same. As such the refund claim is clearly barred by limitation.
5. In view of the foregoing, I reject the appeal on merits as also on limitation.
(Pronounced on ..)
ARCHANA WADHWA JUDICIAL MEMBER
Raja.
4
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