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July 2011

(2011) 22 STR 361 (Tri.-Bang.) — CCEx. & Cus. (Appeals), Tirupati v. Kores (India) Ltd.

By Puloma Dalal, Jayesh Gogri
Chartered Accountants
Reading Time 2 mins
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Refund of CENVAT credit — Well-settled law that amount of credit lying unutilised on account of closure of factory can be refunded — Rule 5 of the CENVAT Credit Rules, 2004.

Facts:
The respondents took CENVAT credit on capital goods and claimed refund of the amount on the ground that the factory was closed and they would not be able to utilise the balance in the said account. The lower authority rejected the refund claim stating that it would amount to non-payment of duty on capital goods which is not permissible and further there is no provision regarding refund of unutilised credit under Rule 5 of the CENVAT Credit Rules or even section 11B of the Central Excise Act. The respondents approached the Commissioner (Appeals). The Commissioner (Appeals) held that only the refund of unutilised credit is asked for, hence, it does not amount to refund of duty paid on capital goods.

Held:
Referring to a number of case laws and relying on the decision in the case of UOI v. Slovak India Trading Co. Pvt. Ltd., 2008 (10) STR 101 (Kar.), it was held that when the amount lying in the CENVAT credit account cannot be utilised, then the assessees are entitled for cash refund and the Revenue’s appeal was accordingly rejected.

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