Case Law Details
Manmade Spinners India Ltd Vs Commissioner of CGST (CESTAT Mumbai)
The appeal between Manmade Spinners India Ltd and the Commissioner of CGST (CESTAT Mumbai) centered around the issue of cash refund in cases where the assessee is operating under the Central Excise Exemption notification No. 30/2004-CE, dt. 9.7.2004. The case brings out significant interpretations and precedents in relation to the entitlement of cash refunds under the Central Excise Exemption Notification.
Analysis: The Tribunal had to decide whether a cash refund of pre-deposit amount, deposited through Cenvat Credit, is permissible. The appellant had requested for cash refund on the grounds that they were operating under the exemption notification No. 30/2004-CE, dt. 9.7.2004 and were hence unable to utilize the Cenvat Credit. Previous orders had been passed, appealed, and remanded, creating a complex legal history.
The CESTAT ultimately ruled in favor of the appellant, citing precedents set by numerous High Courts and the Tribunal itself. The fundamental argument supporting the ruling was that when an assessee is unable to utilize the credit, the amount is permitted to be refunded in cash, even if the same has been paid through their Cenvat Credit account.
The court also noted that the Order-in-Original sanctioning the refund in cash was never challenged by the Revenue, and thus retained its validity. It concluded that the basis of issuing the show cause notice and the subsequent orders by both the authorities had vanished, allowing the appeal by the appellant.
Conclusion: The case of Manmade Spinners India Ltd Vs Commissioner of CGST represents a crucial ruling that has wide-ranging implications for other assessees operating under the Central Excise Exemption Notification. The verdict stresses the right of an assessee to receive a cash refund when they are unable to utilize the Cenvat Credit.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal has been filed from the impugned Order dated 06.02.2019 passed by the Commissioner (Appeals-I), Central Tax, Pune by which the appeal filed by the appellant was rejected.
2. The refund issue involved herein is arising out of the order dated 12.12.2005 passed by the Tribunal in appellant’s case by which the demand along with interest as raised by the department was set aside but penalty was imposed/maintained of Rs. 5 lakhs. Prior to this, during the pendency of the appeal, the appellant was directed to pre-deposit the amount of Rs.50 lakhs which the appellant did by debiting Rs.47,65,000/- in their Input Credit Register and Rs.2,35,000/- in their Capital Goods Credit Register. After the decision of this Tribunal, the appellant filed refund application for Rs.50 lakhs pre-deposited by them with a request to adjust the amount of Rs.5 lakhs against the penalty and to refund the remaining Rs.45 lakhs in cash on the ground that they are working under exemption notification No. 30/2004-CE, dt. 9.7.2004 and hence are not able to utilize the Cenvat Credit, however the same was rejected by the Adjudicating Authority vide Order-in-Original dated 6.7.2006. The 1st Appellate Authority vide Order-in-Appeal dated 23.8.2006 allowed the refund of Rs.45 lakhs in cash after adjusting the penalty of Rs.5 lakhs. On the other hand, the jurisdictional Asstt. Commissioner in compliance with the Order-in-Appeal, sanctioned the refund of Rs.47,45,015/- in cash vide Order-in-Original dated 30.11.2006 and the said amount was paid to the appellant. Subsequently a protective show cause-cum-demand notice dated 29.5.2007 was issued to recover the refunded cash amount with interest on the ground that the Appellate order dated 23.8.2006 has been challenged by the Revenue before this Tribunal.
3. Appeal No.E/3318/ 2006-Mum was filed by the Revenue before this Tribunal against the Order-in-Appeal dated 23.08.2006 and this Tribunal vide order dated 18.11.2006 allowed the appeal of Revenue and the same is reported in 2017 (52) STR 180 (Tri-Mumbai) which in turn was challenged by the appellant herein before the Hon’ble High Court of Judicature at Bombay being Writ Petition No. 8529 of 2019 and the Hon’ble High Court vide order dated 14.8.2019 set aside the Order dated 18.11.2016 passed by this Tribunal and remanded the matter back to the Tribunal to decide the Revenue’s appeal afresh after hearing the appellant herein. Ultimately, the aforesaid Appeal No. E/3318/2006-Mum., against the appellate order of permitting refund in cash, was withdrawn by the department in accordance with its litigation policy dated 22.8.2019 and the appeal was dismissed as withdrawn vide order dated 18.3.2021.
4. I have heard learned counsel for the appellant and learned Authorised Representative for the revenue and perused the case records including the written submissions/synopsis and case laws placed on record. Learned Authorised Representative relied upon the order dated 18.11.2016 of this Tribunal by which their appeal was allowed, which was challenged by appellant before the Hon’ble High Court as stated earlier and another order dated 25.5.2018 of this Tribunal by which the application for Restoration of Appeal filed by the appellant herein was dismissed and prayed for dismissal of the appeal filed by the appellant. Undoubtedly the demand of refund of Rs.47,45,015/-has been confirmed and ordered to be recovered by both the authorities below on the strength of the order dated 18.11.2016 passed by this Tribunal against the Order-in-Appeal dated 23.8.2006. Even the show cause-cum-demand notice in issue was also issued on the premise that the department has challenged the appellate order before this Tribunal. When the said order of the Tribunal has been set aside by the Hon’ble High Court by remanding the matter back to this Tribunal and upon remand that very appeal of the department was withdrawn by the department, then the entire basis of the show cause notice, adjudication order and the appellate order has gone and nothing survived. It revived the Order-in-Original dated 30.11.2006 sanctioning the refund of Rs.47,45,015/- in cash which was paid to the appellant. This order of sanctioning refund in cash has not been challenged anywhere by the department and the same attained finality.
5. If we come on the merits of the issue involved herein whether the cash refund of pre-deposit amount deposited through Cenvat Credit is permissible, the same is no more res integra and Hon’ble High Courts and this Tribunal in the matters of CCE vs. Birla Textile Mills; 2015(325) ELT 651 (Del.); K.G. Denim, Ltd. vs. CESTAT, Chennai; 2017(7) GSTL 422 (Mad.), Lav Kush Textiles vs. CCE, Jaipur-II; 2017(353) ELT 417 (Raj.), Raymond Ltd. vs. CCE, Mumbai-III; 2011(274) ELT 513 (Tri.-Mum), time and again have held that when the assessee is not in a position to utilize the credit, the amount is permitted to be refunded in cash although the same has been paid through their Cenvat Credit account. In the instant matter the appellant herein has requested for cash refund on the ground that they are working under exemption notification No. 30/2004-CE, dt. 9.7.2004 and hence not able to utilize the Cenvat Credit. Therefore I am of the considered view that the appellant is entitle for the cash refund.
6. In view of totality of the facts involved herein viz. that the basis of issuing the show cause notice and of passing of the orders by both the authorities below has gone alongwith the fact that the Order-in-Original sanctioning the refund in cash has not been challenged by the Revenue coupled with the fact that the issue involved herein is no more res integra as discussed in the preceding paragraphs, the impugned order is set aside and the appeal filed by the appellant is allowed with consequential relief, if any.
(Pronounced in open Court on 13.06.2023)
