Cash Refund allowable when Assessee Working Under Central Excise Exemption Notification: CESTAT [Read Order]

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a cash refund is allowable when an assessee working under central excise exemption notification.

The refund issue involved was out of the order passed by the Tribunal in Manmade Spinners India Ltd, the assessee’s case by which the demand along with interest as raised by the department was set aside but the penalty was imposed/maintained of Rs. 5 lakhs. 

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 the Tribunal, the appellant filed a 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 30/2004-CE, dt. 9.7.2004 and hence are not able to utilize the Cenvat Credit.

The Adjudicating authority rejected the same and the 1st Appellate Authority 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 Orderin-Appeal, sanctioned the refund of Rs.47,45,015/- in cash and the said amount was paid to the appellant.

A protective show cause cum-demand notice 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. 

When the said order of the Tribunal has been set aside by the High Court by remanding the matter back to this Tribunal and upon remand that very appeal of the department was withdrawn by the department, then the entire basis of the show cause notice, adjudication order and the appellate order has gone and nothing survived.

A single member bench of Mr Ajay Sharma, Member (Judicial) held that the appellant is entitled to a cash refund since the appellant has requested a cash refund on the ground that they are working under exemption notification 30/2004-CE, dt. 9.7.2004 and hence not able to utilize the Cenvat Credit. 

The CESTAT set aside the impugned order and allowed the appeal.

To Read the full text of the Order CLICK HERE

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