M/s. Kinol Lubes Pvt. Ltd. @APPELLANT @Hash Commissioner of Central GST and Central Excise @RESPONDENT

Binu Tamta, J

M/s. Kinol Lubes Pvt. Ltd., The Appellant has challenged the order-in-appeal no.20/2022-23 dated 01.12.2022, whereby the Commissioner (Appeals) rejected the refund application holding that the refund of un-utilised cenvat credit on closure of units is not admissible in the absence of express statutory mandate or provisions of law.

The appellant was engaged in the manufacture of Cutting Oil at their registered address at Delhi under a valid Central Excise Registration. The appellant had closed its unit at Delhi in the month of March, 2016 and had intimated the Department about the said closure vide letter dated 30.05.2016 requesting them to transfer the accumulated cenvat credit of Rs.17,24,470/-at its Delhi Unit to its Unit at Gurgaon.

The appellant had filed the refund application dated 5.6.2018 seeking refund of Rs.17,24,470/- and the same was allowed vide order dated 5.2.2019. On appeal by the Revenue, the Commissioner (Appeals) remanded the matter to decide the issue of refund in view of the decision rendered subsequently by the Bombay High Court in Gauri Plasticulture P. Ltd. Vs. Commissioner, 2019(30)GSTL 224 (Bom.). On challenge by the appellant, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals), which has resulted in the impugned order allowing the Department’s appeal by relying on the decision in the case of Gauri Plasticulture P.Ltd. (supra).

Heard both the sides and perused the records.

The issue whether the appellant is entitled to claim the refund of un-utilised cenvat credit on closure of unit has been decided by a series of decisions as referred to by the learned counsel for the appellant, which are as under:-

(a) Union of India Vs. Slovak India Trading Co. Pvt. Ltd.- 2006 (201) ELT 559 (Kar.)

(b) Kundalia Industries Vs. CCE-2006 (196) ELT 312 (Tri.-Del.)

(c) Tablets India Ltd. Vs. CCE, Pondicherry-2006(197) ELT 449 (T)

(d) STL Products (P)Ltd. Vs CCE, Bangalore-2006 (198) ELT 521 (T)

(e) CCE Vs. Deepti Chemicals (P) Ltd. – 2006(201) ELT 423 (T)

(f) CCE Vs.FAL Industries Ltd.-2006(196) ELT 109 (T)

(g) CCE, Ranchi Vs. Ashok ARC -2006(193)399 (Jhar.)

(h) Vardhaman Fabrics Pvt. Ltd. Vs. CCE-2006(196)ELT31 (T)

(i) A.G. Export Industries Vs. CCE, Bangalore-2007(212) ELT 421 (T)

(j) CCE Vs. Bombay Burmah Trading Corpn. Ltd. -2005(190) ELT 40 (T)

(k) CCE Vs. Arcoy Industries – 2004(170) ELT 507 (T)

In view of the divergence in the opinion of the learned Members as to the applicability of the decision of the Karnataka High Court in Union of India Vs. Slovak India Trading Co. Pvt. Ltd., 2006 (201) ELT 559 (Kar.) affirmed by the Apex Court and the decision of the Larger Bench of the Bombay High Court in Gauri Plasticulture P. Ltd., the issue has been reconsidered by the majority decision of the Larger Bench of the Tribunal in ATV Projects India Ltd. Vs. Commissioner of Central Excise and Service Tax, Raigad, (2023) 10 Centax 191 (Tri.-Bombay).

Having examined the decisions of both the High Courts as well as the Apex Court, it was concluded that the ratio of the judgement by the Apex Court in Slovak India Trading Co. Pvt. Ltd. (supra) has the binding effect on all the Courts, Tribunals, etc. in view of the binding mandate contained in Article 141 of the Constitution of India. Therefore, the rejection of the appeal by the impugned order by the Commissioner (Appeals) cannot be sustained as the decision of the Karnataka High Court in Slovak Trading Trading Co.Pvt. Ltd., has been held to have the binding effect as the Department’s appeal was rejected by the Apex Court by a reasoned order, 2008 (223) ELT A.170 (SC).

The principle of law was settled by the Tribunal, which was affirmed by the High Court of Karnataka and the Apex Court in Slovak India Trading Co. Pvt. Ltd. that since there is no manufacture in the light of closure of the company, Rule 5 is not available for the purpose of rejection as has been rightly ruled by the Tribunal and, therefore, the refund has been rightly ordered in the light of the closure of the factory and the assessee having come out of the Modvat Scheme. The appellant is, therefore, entitled to the refund as claimed by him.

In the impugned order, the Commissioner (Appeals) has also observed that the claim for refund filed by the appellant on 5.6.2018 is time barred under Section 11B of the Act, which provides that an application for refund of such duty shall be made before the expiry of one year from the relevant date. The Explanation annexed to Section 11B defines the ‘relevant date’ for the purpose of reckoning the time period within which the refund claim is to be filed. While dealing with the issue of limitation, reference is invited to the observations made by the Larger Bench in the case of ATV Projects India Ltd. (supra). While considering the various circumstances for consideration of ‘relevant date’ , it was observed that since closure of a factory is not a routine phenomenon but happens in rarest occasion, the ‘relevant date’ in context with the limitation for filing of refund application under such circumstances cannot be reckoned by reading Explanation Clause provided in Section 11B of the Act. Considering the facts of the present case, I find that on closure of the unit at Delhi in March, 2016, the appellant vide its letter dated 30.05.2016 had requested the Department to transfer the accumulated cenvat credit to its unit at Gurgaon and thereafter, all the correspondences between the appellant and the Department had been at the Gurgaon address of the appellant. While the said request for transferring the credit amount was pending with the Department, the Central Excise Act, 1994 was repealed w.e.f. July, 2017 and as a result, the amount of cenvat credit accumulated could not be transferred to GST. In the circumstances, the appellant had no other alternative but to seek the refund of the cenvat credit amount of Rs.17,24,470/- and accordingly, the refund application was filed on 5.6.2018.

In the facts of the present case, the refund application cannot be rejected as being time barred, particularly, the observations made by the Larger Bench in ATV Projects India Ltd.

I am, therefore, of the considered view that the impugned order deserves to be set aside and hence, the appeal is allowed with consequential benefit.

[Order pronounced on 24th October, 2024]