Leo Prime Comp Private Limited Vs Deputy Commissioner of Central Excise (Madras High Court)
In a significant ruling, the High Court has directed the Customs and Central Excise Department to refund accumulated and unutilised CENVAT credit, debited as excise duty by a defunct 100% Export Oriented Unit (EOU) against export goods. The court set aside an Order-in-Original dated January 25, 2017, which had rejected 25 rebate claims filed by the petitioner under Rule 18 of the Central Excise Rules, 2002, for exports made between March 2012 and October 2013.
The writ petition was filed by the Insolvency Resolution Professional representing the defunct petitioner company, seeking a rebate amount of ₹1,16,93,725 along with interest. The petitioner, a 100% EOU, had ceased manufacturing operations due to various factors.
During the period in dispute, the petitioner exported goods and sought rebate of Central Excise Duty paid on them. The department contested the claim, arguing that the goods were exempt from excise duty under Notification No. 24/2003-CE dated March 31, 2003, and the exemption only ceased if goods were brought to other places in India, which was not the case for exported goods.
The petitioner’s representation, presented by senior counsel Mrs. Pushya Sitaraman, contended that despite the exemption and an embargo under Section 5A(1A) of the Central Excise Act, 1944, preventing the payment of excise duty on exempt goods, the duty was paid. This payment, it was submitted, was an attempt to liquidate accumulated and unutilised CENVAT credit, influenced by a decision of the High Court in Orchid Healthcare versus Union of India [2013 (290) ELT 504]. The court noted that an appeal against the Orchid Healthcare decision was pending before a Division Bench.
