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2022 (3) TMI 325 - HC - Central ExciseRefund of Excise Duty in cash - CENVAT credit for acquisition of capital goods used in its process of manufacture - Rule 3(5) of the Cenvat Credit Rules, 2004 - HELD THAT:- In the present case, upon the assessee using the Arc Furnace for a considerable period of time, it desired to replace the same or, at any rate, to sell or transfer the same; whereupon the assessee was required to refund in cash the entire quantum of Cenvat credit that it had obtained at the time of the acquisition of the Arc Furnace. There is no dispute that such refund was made in cash - assessee contends that since the expression “for any reason” did not find any place in Section 11A of the Act that ought to have been applied to the present case, it is evident that the Tribunal took irrelevant considerations into account and the decision-making process itself was awry. Refund of the Cenvat credit on account of capital goods having been raised on the assessee earlier - Rule 3(5) of CCR - HELD THAT:- The Tribunal at various places and some High Courts have taken a view that the benefit given under amended Rule 3(5) of the said Rules for depreciation of the capital goods would, in effect, have retrospective operation. Rule 3(5) of the said Rules of 2004 could have been seen to have been arbitrary in not making a distinction between the quantum of Cenvat credit that ought to be refunded by an assessee who intended to sell any capital goods for which Cenvat credit which had been obtained, within a short time of the acquisition of capital goods or after long years of use thereof. The distinction was brought about and the remission, so to say, was provided in the amended Rule 3(5) of the said Rules in 2007 - it is correct in interpreting the benefit conferred by the amendment to Rule 3(5) to have retrospective operation even if the demand for the refund of the Cenvat credit obtained for the capital goods had been raised prior to the amendment of 2007. Exemption that the appellant is entitled to by reason of the location of its manufacturing facility - HELD THAT:- What the assessee says is that if it was liable in a month to pay ₹ 100 on account of the excise duty it would be entitled to get refund of such amount of ₹ 100 the next month and so on. However, if the assessee had adjusted the Cenvat credit obtained for the capital goods against a part of the excise duty payable for its manufactured goods, then the appellant would have paid only the amount by which the duty exceeded the Cenvat credit in cash to be entitled to receive the refund of such cash only. In this case, when the appellant had used the Cenvat credit for acquiring the Arc Furnace and had adjusted the same against excise duty payable for its manufactured goods and paid the balance amount in cash after adjusting the credit, the quantum of credit which the assessee had obtained is lost forever to the assessee - What the assessee suggests is that the Cenvat credit given for acquisition of capital goods to a manufacturer, who is otherwise exempted from paying excise duty on its manufactured products, is revenue neutral. There is considerable force in such contention that when a manufacturer is entitled to refund of the entire excise duty, the refund to the Department of any adjusted Cenvat credit availed of would again have to be refunded by the Department by virtue of the exemption to which the assessee is entitled to. The Department, fairly, accepts that the matter may require fresh consideration. Accordingly, the judgment and order of the Tribunal is set aside. The order of the adjudicating authority that was carried to the Tribunal is also set aside - it is deemed fit and proper to remand the matter to the previous level, the adjudicating authority, for the entire gamut of the matter to be considered afresh in accordance with law - Appeal allowed by way of remand.
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