The Chennai bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that refund of the balance unutilised cenvat credit of sold factory is not allowable.
M/s. Alfred Berg & Co., (I) Pvt. Ltd, the appellant was earlier a manufacturing factory engaged in the manufacture of P or P Medicaments falling under chapter 13 of the Central Excise Tariff Act 1985. The appellant stopped their manufacturing activity in the year 2014 and sold the assets to another company namely M/s. Mesmer Pharmaceuticals through a Memorandum of Understanding dated 10.11.2014.
The appellant company then filed a refund claim for a refund of Rs.2,17,45,625 vide their letter dated 18/7/2016 being the book balance outstanding in their CENVAT account.
The appellant sought a refund of accumulated CENVAT credit lying in their books by way of cash from the department. Show cause Notice dated 24/8/2016 was issued to the appellant proposing to deny the refund claim.
After due process of law, the Original authority rejected the refund claim. Against this order, the appellant preferred an appeal before the commissioner appeals who vide order impugned herein upheld the rejection of refund claim.
Shri M.N. Bharathi appeared and argued for the appellant. It was submitted that the appellant sold their factory to M/s. M.N. Pharmaceutical and they have ceased to be the manufacturer.
The refund claim is for a refund of the unutilised credit lying in the CENVAT account. The decision in the case of Union of India vs Slovak India Trading Company Ltd. reported was referred to by the counsel for the appellant to submit that the appellant would be eligible for a refund.
The question was whether the appellant is eligible for a refund of unutilised credit lying in their CENVAT account at the time of closing the factory. It was observed that the Division Bench of the High Court of Karnataka in the said case took a view that there is no express prohibition in Rule 5 to refund the unutilised CENVAT credit.
In light of the decision, a two-member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao, member (technical) held that the refund can not be allowed. The appeal filed by the appellant is dismissed.
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