Order Date – 03 May 2023

Parties: M/s Mahavir Metal Manufacturing Company Vs Commissioner (Appeals), Central Excise and CGST

Facts – 

• The Appellant, M/s Mahavir Metal Manufacturing Company, was engaged in manufacturing of umbrella/ umbrella parts. Their factory got closed in the financial year 2016- 2017. The appellant filed a refund claim for unutilized Cenvat credit on 15.04.2019 under Rule 5 of Cenvat Credit Rules, 2004. They had migrated under GST, however, had not filed Trans-1.
• A show cause notice as issued upon the appellant proposing the rejection of the refund claim of accumulated Cenvat credit. The said proposal was confirmed on the ground that Rule 5 of Cenvat Credit Rules is not available for the purpose of refund that too after the closure of the factory. Also, the appellant has failed to transfer the closing balance of Cenvat credit through Trans-1 as was mandatory in terms of Section 140 of CGST Act 2017.

Issue – 

• Whether the appellant is entitled to refund Cenvat credit?

Order – 

• The Tribunal observed that since the refund claim was filed under Rule 5 of Cenvat Credit Rules, 2004 and after it got amended after April 2012. The amended Rule 5 does not permit refund of such Cenvat credit which could not be utilized for any possible reason.
• Other than Rule 5 of Cenvat Credit Rules, there is no other provision either in Cenvat Credit Rules, 2004 or in Central Excise Rules, 2002 for giving cash refund of the accumulated Cenvat credit. Even Section 11B of Central Excise Act is only for the refund of duty paid either through cash or through Cenvat credit or for the Cenvat credit wrongly reversed.
• In the present case, none of the conditions for invoking Rule 5 gets satisfied. In addition, when admittedly, the appellant while registering into new GST regime has not filed Tran-1 showing the impugned unutilized Cenvat credit Section 140 of CGST Act resultantly cannot be invoked. The question of giving cash refund for unutilized lying Cenvat credit does not at all arises.
• Further the manufacturing was closed in financial year 2016-2017 and the refund claim could not have been filed before 16 April 2017 i.e., more than two years of the closure of manufacturing activity.
• Hence it was held that the Adjudicating Authority has not committed any error while holding that Rule 5 of Cenvat Credit Rules, 2004 cannot be invoked to sanction the refund of unutilized Cenvat credit lying with the appellant much prior to April 2017 that too in cash as per Section 140 of CGST Act, 2017.
• The Appeal dismissed.