Business entitled to Refund of Credit lying in Cenvat Credit account on Closure: CESTAT [Read Order]

The Delhi bench of the Customs, Excsise and Service Tax Appellate Tribunal (CESTAT), while granting relief to Nichiplast India Private Ltd, held that the Company is entitled to refund of the amount of Cenvat Credit lying in their Cenvat Credit account on the closure of business along with interest as per section 11BB of Central Excise Act.

The appellants were engaged in manufacturing of ‘Micro Pores Surgical Tapes’ and ‘First Aid Bandages’(Medicated Adhesive Plasters) falling under Chapter Sub-Heading No. 30059060 and 30051090 respectively of Central Excise Tariff Act, 1985. In the year 2017, the Company closed their manufacturing activities and surrendered their Registration Certificate. Subsequently, their claim for refund of unutilisedCenvat Credit in their account amounting to Rs. 15,34,137/- was rejected by the Central Excise authorities for want of reliable documents.

On first appeal, the Commissioner (Appeals) upheld the order of the Revenue observing that there is no such provision under the Central Excise Act read with Rules to sanction refund in cash of unutilized cenvat credit on closure of the unit.

The appellant-Company approached the Tribunal relying on various precedents including the order of the Supreme Court in their favour. It was further contended that it is admitted fact that pursuant to closure of the factory on 28.6.2017, the appellant-assessee did not migrate to GST regime.

Allowing the appeal, the Judicial Member Anil Chaudhary observed that “having considered the rival contentions, following the rulings of Karnataka High Court as confirmed by the Hon’ble Supreme Court, I hold that the appellant is entitled to refund of the amount of Cenvat Credit lying in their Cenvat Credit account on closure of business. I further direct that the appellant is entitled to interest as per Rules, as per section 11BB of Central Excise Act, i.e. three months after the date of application till the date of grant of refund.”

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