Interest on delayed Refund payable u/s 11BB of Central Excise Act when the Double benefit of the Same amount not exists: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that interest on delayed refund payable u/s 11BB of Central Excise Act when the double benefit of the same amount not exists.

Shri S.Suriyanarayanan, Advocate appeared for the Appellant Shri Ghanasyam Soni, Joint Commissioner appeared for the Respondent.

Bright Engineering Works, the appellant is an EOU unit and filed 18 refund claims amounting to Rs. 43,35,610/- under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) for un-utilized Cenvat Credit of Input Services used in or about the manufacture of export goods. 

On receiving the final exit order dated 21.07.2011 from the Development Commissioner, Kandla SEZ, Appellant firm submitted an online application for amendment of Central Excise registration as a DTA unit. After debonding, the appellant did not carry forward the accumulated Cenvat Credit but showed the same as Cenvat Credit Refund Receivable in its financial accounts and balance sheet. Jurisdictional Assistant Commissioner vide Order-In-Original dated 25.07.2013 sanctioned refund of unutilized cenvat credit of Rs. 43,35,610/- to the Appellant. 

Since the appellant firm has acquired the right and privilege of getting a refund of cenvat credit of the service tax paid and remaining unutilized on account of exports before the debonding of the EOU unit, there cannot be any lapsing of the credit whatsoever as per law.

It was viewed that the Appellant has fulfilled conditions laid down under Rule5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T.) dated 14-3-2006.

Mr Ramesh Nair, member (judicial), from the refund order, observed that all the claims were sent to Range offices for verification and the same has been duly verified by the Range officers. The charge of double benefit made by the revenue is incorrect on the face of the records in as much as the appellant even though did not carry forward and debit the refund amount in their cenvat account.

 The Tribunal viewed that the non-transfer of unutilised cenvat credit is as good as a reversal of cenvat. The charge of the double benefit will sustain only when the assessee, on the one hand, claims the refund and on other hand utilise the same amount for payment of duty on their clearance of goods, which is nobody’s case.

While allowing the appeal, the Court held that the Commissioner (Appeals) has erred in rejecting the appellant’s claim for refund and the impugned orders were set aside.

To Read the full text of the Order CLICK HERE

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