2023 (5) TMI 892 - AT - Service Tax

Refund claim on account of excess deposit of Service Tax on account of unutilized Cenvat Credit - Closure of business due to death of the proprietor - Intellectual Property Rights Service - Rule 5 / Rule 5B of Cenvat Credit Rules 2002 - order for refund even if there is no production and there is no clearance of finished goods - entitlement for refund even if it goes out of Movat Scheme or the Company is closed.

HELD THAT:- This Tribunal had an occasion to consider the two contrary viewpoints in the case of CCE, HYDERABAD VERSUS APEX DRUGS & INTERMEDIATES LTD. [2010 (8) TMI 913 - CESTAT BANGALORE], after debating the same, it came to the conclusion that Rule 5 of the Cenvat Credit Rules did not prohibit the grant of such credit refund when for any reason accumulated credit was not utilizable. The assessee in the present case has ceased to be a manufacturer upon surrender of the licence and so the credit available remains unutilizable. Following the judgement of the Hon’ble Karnataka High Court in UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. [2006 (7) TMI 9 - KARNATAKA HIGH COURT], the Tribunal had dismissed the appeal filed by the department and allowed the refund.

To similar effect is the Tribunal’s decision in the case of COMMR. OF C. EX. & CUS. (APPEALS), TIRUPATI VERSUS KORES (INDIA) LTD. [2008 (8) TMI 588 - CESTAT, BANGALORE], allowing refund of Cenvat Credit lying with the assessee upon closure of the factory.

In view of the fact that right to availment of Cenvat Credit is a vested right as held in EICHER MOTORS LTD. VERSUS UNION OF INDIA [1999 (1) TMI 34 - SUPREME COURT], which accrues to a manufacturer, the fact of closure of business leading to non-utilization thereof, cannot deprive the deceased of their accrued interests in law and following judicial discipline and precedent decisions, the appeal is allowed with consequential relief.