TMI Blog2015 (2) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... w, section 11 B is only for the refund of the duty paid either through cash or through cenvat credit or of the cenvat credit wrongly reversed. While refund of duty paid either through cash or through cenvat credit account is subject to the bar of unjust enrichment, the refund of wrongly reversed cenvat credit is not subject to the bar or unjust enrichment. But this section cannot be invoked for cash refund of the unutilized cenvat credit lying in the cenvat credit account of a manufacturer at the time of closure of the factory. In fact, other than Rule 5 of the Cenvat Credit Rules, 2004, there is no provision either in Central Excise Act, 1944 or in any Rules made there-under for cash refund of accumulated cenvat credit Rules, 2004. When a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act, 1944. The refund application mentions that the company has stopped production since June 2007 due to stiff competition, that the cenvat credit of ₹ 2,35,86,612/- in its cenvat credit account is lying unutilized, that there is no possibility utilizing said credit in any near future as there is no chance of resumption of the operations of the factory and therefore the company requests refund of the cenvat credit under clause (C) of provisions of section 11B (2) of the Central Excise Act, 1944. Section 11B of Central Excise Act, 1944 is about refund of the duty and clause (c ) of Provisions of Section 11 B (2) provides that the bar of unjust enrichment would not be applicable to the refund of credit of duty paid on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying upon Hon ble Karnataka High Court judgment in the case of Slovak India Trading Co. Pvt. Ltd. (supra) and pleaded that in terms of this judgment of Hon ble Karnataka High Court, there is no express prohibition in Rule 5 of the Cenvat Credit Rules, 2004 against permitting cash refund of the accumulated cenvat credit, that for cash refund of the accumulated cenvat credit, it is not necessary that the cenvat credit should be in respect of the inputs used in or in relation to manufacture of final products exported out of India without payment of duty under bond/LTU, that cash refund would be admissible, even if, a factory stops production and at the time of stopping of the production, some unutilized cenvat credit is lying in cenvat cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia under bond or LTU and which cannot be utilized for payment of duty on any goods cleared for home consumption or any goods cleared for export under rebate claim. He also pleaded that cash refund under Rule 5 of the Cenvat Credit Rules is also subject to various conditions specified in the Notification issued under this rule and one of the conditions which has to be satisfied is that the exports have not been made under draw back scheme or under input duty rebate claim, while in this case, there is no evidence that the cenvat credit sought to be refunded is in respect of exports out of India under bond and those exports have been made without claiming the duty draw back or input duty rebate. He also emphasized other than Rule 5 of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit account would lapse, unless the factory resumes production. In the event of the factory being taken over by another person, and resuming production, Rule 10 permits the transfer of cenvat credit to the new owner subject to certain conditions. But there is no provision for cash refund of such unutilized credit. 7. Rule 5 of the cenvat credit rules permits cash refund of accumulated cenvat credit only in the following circumstances:- (1). The cenvat credit which has accumulated and whose cash refund is sought is in respect of input /input service used in the manufacture of finished goods which have been exported out of India under bond or letter of undertaking or used in intermediate products cleared for export. (2). The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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